Board declines move to collective investment trust after advisers cite small savings, legal complexity

The Englewood City Pension Board decided against switching one of its mutual‑fund holdings into a collective investment trust (CIT), after advisers said fee savings were modest relative to added legal and operational complexity.

Consultants presented a comparison showing the Harbor Capital Appreciation holding (about $3,000,000) would drop the plan’s net expense ratio from roughly 0.59% to 0.38% in a CIT structure, yielding approximately $6,300 in annual savings. "So the actual cost that you would save on this is about $6,300 a year," the consultant said.

Board members raised concerns about the tradeoffs: CITs require additional paperwork, may impose longer liquidity windows (consultants noted redemptions could take up to 30 days), and often include provider agreements that reference other jurisdictions and indemnification clauses. The consultant said those documents commonly cite the laws of Delaware and include mutual indemnification language that can be "problematic for municipalities."

"Why jump through all these hoops for $6,300?" Chair Bob Stevenson asked, noting attorney review costs could erase the small savings. Members agreed the potential legal review and operational changes outweighed the modest fee reduction. The board decided to "stay the course" in the current mutual‑fund share class and asked staff to note the discussion in the report and continue monitoring opportunities.

Consultants said they will flag similar opportunities in next year’s share‑class review and can provide draft CIT contract language for staff and the city attorney to review if the board asks to revisit the decision.