Collective trusts today "look and feel just like a mutual fund" and plan sponsors are much more comfortable using them, she said.
Collective trusts are also being used more frequently in target-date funds, surpassing the use of mutual funds. Nearly 3 in 5 plan sponsors, 56%, are using collective investment trusts for their target-date funds, compared with 29% using mutual funds.
The shift represents a "big move toward institutional product," Ms. McAllister said.
Plan sponsors are also turning away from target-date funds that are proprietary to their record keepers, the survey found.
In 2021, 20% of plan sponsors used their record keeper's target-date option, down from 67% a decade ago. Even less – 18% — plan to use their record keeper's target-date fund next year.
The study also posted a significant uptick in the number of plan sponsors looking to retain retiree assets in their plans, a development driven in part by sponsors' growing interest in institutional products, such as collective trusts.
Participants near or at retirement have the largest balances, bringing the scale that plans need to leverage the institutional pricing available through collective trusts, said Greg Ungerman, Callan's defined contribution practice leader, during the webinar.
In 2021, 76% of plan sponsors with strategies in place for retaining post-employment assets were looking to retain the assets of both retirees and terminated participants, up notably from 44% in 2015.
"That will be a continued trend" as plan sponsors "use institutional products to build a better mouse trap for participants and retirees in the plan," Mr. Ungerman said.
The survey is based on 101 plan sponsors.