A Collective Investment Trust (CIT) is also known as a commingled or collective fund.
CITs are:
Increasingly used in defined benefit (pension) plans and defined contribution (401k) plans.
Tax-exempt, pooled investment vehicles maintained by a bank or trust company exclusively for qualified plans, including 401(k)s, as well as for certain types of government plans.
Subject to banking regulations, not subject to the Investment Company Act of 1940. Less regulated. Not registered with the SEC.
Customization of holdings.
Less expensive for investors, thanks to lower marketing, overhead and compliance-related costs. Lesser profile.
No trading issues. CITs only managed for those specific plans and are not available to the general public. Market timing and other trading abuses tend to not be an issue.
Pension Protection Act of 2006 gave tailwind to CITs and approved them as default investment options for defined contribution plans.
Collective Trusts are unregistered investment vehicles, like hedge funds. Mutual funds, by contrast, are registered investment vehicles.
What registration means is that an investment vehicle, like a mutual fund, is registered with the SEC/FSA, etc... and is compelled by law to disclose monthly performance and portfolios. That is not the case with collective trusts.
While unregistered, collective trusts are not unregulated. In the U.S., collective trusts are supervised by the Office of the Comptroller of the Currency (OCC).