Index Selection: We build on the benefits of asset class diversification through thoughtful index selection.
Securities Lending: Meaningful to some organizations, overly complex for others, State Street offers the value of securities lending choice.
Index-based target date funds (TDFs) are designed as fund-of-fund structures in which the exposure to individual stocks and bonds is obtained through investments in various underlying index funds. For example, a State Street Global Advisors Target Retirement Fund will invest in 11 underlying index funds, with both the target retirement funds and underlying index funds structured as CITs.
State Street’s decision to use the CIT structure is driven by the structure’s advantages over mutual funds, including a greater opportunity for low-cost trading (vis-à-vis unit and security crossing), more pricing flexibility, increased portfolio diversification without additional investment management fees, and reduced tax exposure on dividends.
While most providers offer CIT structures, in some cases, mutual funds underlie the configuration, meaning TDFs aren’t able to deliver all of the benefits of a CIT structure.