That the trusts can be 25 to 40 basis points cheaper than mutual fund costs makes them naturally attractive to large sponsors, fee-conscious after a decade's worth of expensive litigation. 

None of this should be taken to suggest that CITs are some magic elixir.

Jerry Schlichter, perhaps the most prominent litigator of participant excessive-fee claims, says deploying CITs doesn't guarantee sponsors are meeting their fiduciary obligations. 

"It's impossible to have a one-size-fits-all scenario for every plan," said Schlichter, who nonetheless agrees that CITs are likely to see an increasing role in settlements going forward. 

"A plan fiduciary is held to the standard of a prudent investor with any product," he said. "Fees have to be assessed, and so does historical performance. It's a similar calculus as with mutual funds. While there's no assurance a sponsor couldn't have a potential exposure with CITs, they are an option a prudent fiduciary should consider as fees have become a more important part of the conversation." 

They might not like the source, but CIT advocates couldn't have asked for a clearer endorsement.

Schlichter notes that even the Department of Labor has pointed out that the average retail mutual fund costs participants four times as much as most CITs. For the largest sponsors, with sometimes more than $1 billion in plan assets, not leveraging that purchasing power to provide the most cost-efficient options for participants is a potential fiduciary breach. 

Does any of this necessarily mean CITs are positioned to challenge mutual funds' dominance in plan design, or force mutual funds to lower their fees? 

"It's impossible to guess how the financial services industry will develop their products in the future, or whether CITs will some day be a more common vehicle than mutual funds," said Schlichter. 

What is clear, however, is that demand for these pooled investments, designed exclusively for ERISA-governed retirement plans, is mounting, and showing no sign of slowing anytime soon.

First established in the late 1920s, CITs have been around a lot longer than mutual funds. The Pension Protection Act of 2006 allowed CITs to be offered in defined contribution plans. The result has been a 13-18 percent annual growth in the products since.  

About 60 percent of large sponsors now incorporate CITs in their investment lineups, according to industry estimates, up from 52 percent in 2013.

On the other hand, misconceptions persist. 

"People can confuse 'un-registered' with 'un-regulated," said Betsy Warrick, a senior vice president with Invesco Trust Co., the arm of Invesco responsible for managing assets in collective trusts. 

That specific confusion stems from the fact the CITs are not registered the SEC. 

Rather, CITs, because they are trusts, which are banking products, fall under the oversight of either the Office of Comptroller and Currency – if the trust is nationally chartered – or, state bank regulators, if the trust is a state-chartered bank. 

Warwick says about half of CIT funds come from federally chartered trust companies, leaving the other half in state-chartered trusts. 

Whether chartered federally or at the state level, that CITs fall to the oversight of banking regulators, and not the SEC, largely explains their value proposition to plan sponsors.

The trusts bear less operational expenses than mutual funds, in part because they have lower marketing costs — they are not available to retail investors, therefore have no major advertising or communications campaigns to support. 

But neither are CITs required to be valued on a daily basis; there's no "ticker symbol" on the trusts, because they are not publicly traded. Nor are CITs required to assemble and distribute investment prospectuses for each shareholder. 

All of that makes them less costly.

Less appealing to some is the question of CIT opaqueness, which was likely a reason behind the formation of the Coalition of Collective Investment Trusts.

(Morningstar maintains a database on CITs, but it's not available to individuals, only plan sponsors and institutional investors.) 

Assembled in 2012 and comprising 40 CIT providers — the trust companies of Fidelity, Schwab, Vanguard, T. Rowe Price, and, yes, Ameriprise are among the list of members — the coalition works as a lobbying arm and regulatory go-between on behalf of collective trusts. 

Among the coalition's goal is to provide education and a "meaningful" dialogue about CITs. 

That's not yet easy to do. Basic industry data, like total assets managed in CITs, is subject to wide variances in reporting.

One coalition paper cited assets of $1.2 trillion in 2013, attributing the calculation to Morningstar. 

Recent reporting in Reuters puts the CIT assets of two trust companies – BlackRock and State Street — at nearly twice that ($2.2 trillion combined at the end of 2014). 

In any case, in regards to one of the bigger criticisms of CITs, Invesco's Warrick insists the pricing disclosure concerns sponsors have had with these products in the past have long since been addressed. 

"Every one of our qualified CIT funds is priced daily," she said. The funds are managed identically to mutual funds, she added, and while participants don't get quarterly reports or prospectuses, they do get a Declaration of Trust, which sets out the investment guidelines for each CIT.

And 2012 DOL cost-disclosure requirements did not ignore CITs. 

"You could even make the case we are more regulated than mutual funds," she said.

Also read: The naked truth about collective trusts