Key Takeaways
- • Fidelity Investments launched 14 new collective investment trust (CIT) vehicles in the Freedom Plus Commingled Pool target-date series, featuring 5% direct real estate exposure integrated within its existing TDF glide path framework.
- • The alternative investment allocation sits alongside equities, bonds, and short-term strategies, with management signaling plans to evaluate additional alternative asset classes for future inclusion in the portfolios.
- • Fidelity manages over $120 billion in target-date solution assets across more than 300 institutional clients as of September 30, positioning this CIT expansion to capture growing plan sponsor and adviser demand for alternatives.
- • The launch reflects a broader industry shift documented by Cerulli Associates, where CITs continue displacing mutual funds as the preferred vehicle structure for retirement plan investments.
- • Andrew Dierdorf, co-portfolio manager, emphasized that alternative asset classes in multi-asset portfolios may provide improved diversification and enhanced risk-adjusted returns, addressing institutional investor appetite for alternatives in defined contribution plans.
Summary
Fidelity Investments announced the launch of 14 new collective investment trust vehicles on November 1, 2023, expanding its Freedom Plus Commingled Pool target-date series to include alternative investment exposure. The core innovation is a 5% allocation to direct real estate investments, integrated within Fidelity's established target-date fund glide path methodology. This allocation sits alongside traditional equity, fixed income, and short-term strategies, mirroring the structure of Fidelity's existing Freedom TDF products that have gained traction in defined contribution plan markets.
The strategic rationale centers on diversification benefits and risk-adjusted returns. Andrew Dierdorf, co-portfolio manager of the Freedom Plus CITs, stated that "alternative asset classes in a multi-asset portfolio may provide potential benefits, including improved diversification and enhanced risk-adjusted returns." The offering directly addresses documented growth in plan sponsor and adviser interest in alternative investments, positioning Fidelity to capture this expanding segment while maintaining the accessibility of CIT structures for eligible qualified retirement plans.
Fidelity's asset management division indicated openness to expanding the alternative sleeve beyond real estate. A company spokesperson confirmed that the investment team will "continue to evaluate additional alternative asset classes for inclusion in the portfolios over time," suggesting a phased approach to building out the alternatives platform. This signals recognition that CIT structures—which offer operational and regulatory advantages over mutual funds for institutional retirement plans—provide an efficient vehicle for delivering alternative exposures to qualified plan sponsors.
The expansion builds on Fidelity's existing CIT lineup, which includes Freedom, Freedom Blend, and Freedom Index offerings. As of September 30, 2023, Fidelity managed more than $120 billion in assets under management across target-date solutions for over 300 institutional clients. Industry research from Cerulli Associates, released contemporaneously with the announcement, reinforced the secular trend underpinning this launch: CITs continue to displace mutual funds as the dominant vehicle structure for target-date and other retirement plan investments, driven by cost efficiency and operational flexibility in the institutional market.
The strategic rationale centers on diversification benefits and risk-adjusted returns. Andrew Dierdorf, co-portfolio manager of the Freedom Plus CITs, stated that "alternative asset classes in a multi-asset portfolio may provide potential benefits, including improved diversification and enhanced risk-adjusted returns." The offering directly addresses documented growth in plan sponsor and adviser interest in alternative investments, positioning Fidelity to capture this expanding segment while maintaining the accessibility of CIT structures for eligible qualified retirement plans.
Fidelity's asset management division indicated openness to expanding the alternative sleeve beyond real estate. A company spokesperson confirmed that the investment team will "continue to evaluate additional alternative asset classes for inclusion in the portfolios over time," suggesting a phased approach to building out the alternatives platform. This signals recognition that CIT structures—which offer operational and regulatory advantages over mutual funds for institutional retirement plans—provide an efficient vehicle for delivering alternative exposures to qualified plan sponsors.
The expansion builds on Fidelity's existing CIT lineup, which includes Freedom, Freedom Blend, and Freedom Index offerings. As of September 30, 2023, Fidelity managed more than $120 billion in assets under management across target-date solutions for over 300 institutional clients. Industry research from Cerulli Associates, released contemporaneously with the announcement, reinforced the secular trend underpinning this launch: CITs continue to displace mutual funds as the dominant vehicle structure for target-date and other retirement plan investments, driven by cost efficiency and operational flexibility in the institutional market.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.