CTFs are not new to the marketplace. Since 1927 these investment vehicles have provided value to the retirement plan community. In recent years, the operational effectiveness of this alternative has expanded and the popularity of this vehicle has increased. Historically, CTFs were only required to be priced on a monthly basis. With today’s technological environment, however, the ability to price CTFs daily is commonplace and indeed required by many plan participants who have become accustom to having financial data available at their fingertips.
The First State Trust Company Collective Trust Funds, originally offered in 1983, provide cost-sensitive clients with retirement plan investment options that include both index and actively managed investment funds. Our CTFs span a wide range of strategies sub-advised by nationally recognized investment advisors that typically require a $2 million minimum investment. An employee benefit plan investing in FSTC’s Collective Trust Funds, however, gains access to many different investment advisors and strategies for the same initial deposit.
The benefit of appointing industry known investment advisors is compounded further by the multi-manager approach which FSTC employs for many CTFs. The assignment of two or more sub-advisors with complementary styles to one investment mandate allows for the reduction of risk by adding diversification and potentially increased returns.
First State Trust Company relies on the research capabilities of nationally know consultants, including Morgan Stanley Smith Barney’s Consulting Group, to select the most capable managers in the industry to sub-advise each Collective Trust Fund. These consultants provide current data reflecting the manager’s personnel, performance and investment strategy.
Plan sponsors have stringent fiduciary requirements placed on them by the Department of Labor. This burden can be lightened by First State Trust Company.
The FSTC Investment Committee meets monthly to review the CTFs. The Investment Committee is comprised of senior management from within FSTC as well as non-voting members who may be appointed to provide additional expertise. The primary responsibility of the Committee is to set investment policies and monitor adherence to the policies. In addition, the Committee reviews the activity of each investment manager, including performance against the benchmark, compliance and overall suitability as a fiduciary manager.
FSTC has adopted an Investment Policy Statement (“IPS”) that outlines the investment objectives and constraints of the Collective Trust Funds. The IPS along with the Declaration of Trust and each Fund’s Supplemental Declaration of Trust establishes a clear understanding of the investment goals and objectives of the Funds, offers guidance and limitations to all sub-advisors, and formulates a basis for evaluating investment results.
For Investment Management Firms
Investment Advisors looking to enter the strong and growing Collective Trust Fund market may choose to partner with First State Trust to guide you through the creation and implementation of CTFs. Our proven turnkey solution will allow you to concentrate on your area of expertise - investment management - and benefit from FSTC’s twenty-five years of experience.
For additional information, please contact the CTF Product Manager, Megan McCafferty, at 302-573-5973 or mmccafferty@fs-trust.com
