By Anne Tergesen

Sept. 25, 2015 5:30 a.m. ET

Don’t look now, but the mutual funds in your 401(k) may not be mutual funds after all.

In recent years, more 401(k) plans have replaced the mutual funds in their investment lineups with collective investment trusts. These investments look and act a lot like mutual funds, but generally have lower fees and disclose less about their inner workings to 401(k) participants.

Also known as collective trust funds, such investments currently account for $2.4 trillion, or 16%, of the $15 trillion in 401(k)-style and pension plans, up from $1.3 trillion (and 12.7% of the total) in 2009, according to the Investment Company Institute and Cerulli Associates, a research firm that specializes in the asset-management industry. The trusts are accounts available only to retirement plans. They are sponsored by banks and trust companies and are primarily overseen by banking regulators, rather than subject to mutual-fund rules enforced by the Securities and Exchange Commission.

By and large, experts say, the trend has been positive for 401(k) investors. For 401(k)s, “collective trusts are often the lowest-cost option on the market,” says Nathan Voris, director of sponsor and workplace investments at Morningstar Inc.

Many collective trusts track indexes, like index mutual funds. Over the past two years, Fidelity Investments joined a growing number of companies introducing collective-trust versions of actively managed mutual funds, when it made the move with eight funds, including Fidelity Contrafund and Fidelity Low-Priced Stock Fund. The fees on the trusts can “be as much as 0.2 or 0.3 percentage points” cheaper than the shares of the mutual funds, says Chuck Black, Fidelity’s senior vice president of investment services.

Savings of that magnitude aren’t unusual. According to investment consulting firm Callan Associates Inc., participants in 401(k) plans with $1 billion in assets pay an average of 1.01% in fees for an investment lineup of retail mutual funds. Average participant costs decline—to 0.85%—when these plans use institutional share classes of the same mutual funds, an option available to most 401(k) plans, says Lori Lucas, defined-contribution practice leader. But with collective trusts, average costs fall to 0.54%—“almost half the retail price,” she adds.

Collective trusts’ cost advantages stem mainly from the fact that they are exempt from the Investment Company Act of 1940, which governs mutual funds. Funds are required to deliver prospectuses and periodic reports to investors, as well as to make certain filings to the SEC. Without those rules, trusts save on legal and distribution costs, attorneys say.

Because of their narrower audience, collective trusts also typically spend less on marketing than mutual funds, Mr. Voris says.

The trusts’ low expenses are attractive to employers seeking to reduce 401(k) participants’ costs amid a wave of litigation over high 401(k) fees and the 2012 introduction of federal regulations that mandate 401(k) fee disclosure to participants.

Collective trusts—which have been around since the 1920s—are most commonly used by the biggest 401(k) plans. But they have become accessible even to midsize 401(k) plans with $100 million in assets or more, says Drew Billingsley, vice president at American Century Investments. The Kansas City investment company began offering collective trusts to 401(k)-style plans in 2007 and this summer reduced the minimum required investment on its target-date collective trusts from $50 million to $15 million.

Still, the trusts’ lower fees come with trade-offs. Collective trusts don’t have ticker symbols, and 401(k) participants can’t track their performance or compare them with other investments using public websites including Morningstar.com, Yahoo Finance, and newspapers such as The Wall Street Journal, which publish mutual-fund performance data.

Moreover, while mutual-fund investors can simply download fund prospectuses and other standardized materials from fund-company websites, 401(k) participants in collective trusts may have to request similarly detailed documents from their 401(k) plan or the company running the trust.

In comparison with mutual funds, collective trusts are “less transparent,” says Brooks Herman, head of data and research at BrightScope Inc., which tracks 401(k) plans. “It’s the tradeoff people are willing to make for their lower fees.”

Still, as collective trusts have caught on with 401(k) plans in recent years, many have increased voluntary disclosures to 401(k) participants. While collective trusts are not required to provide daily pricing, that has become a standard feature.

On websites for 401(k) plan participants, the information about trusts may look a lot like that on funds. That is partly a function of trusts increasingly being provided by banking units of big asset managers and 401(k) record keepers.

Many plan administrators publish fact sheets that disclose information including a collective trust’s performance and top holdings. Invesco Ltd.’s trust company, which sponsors 45 collective trusts with approximately $60 billion in assets, updates holdings on a monthly basis, says senior vice president Betsy Warrick. For its collective trusts, Fidelity publishes a document that resembles a slimmed-down prospectus, says Mr. Black.

“There is a movement among trust sponsors to make their products look more like mutual funds,” says Ms. Lucas. “More and more trusts are offering prospectus-like documents. They recognized that plan sponsors and participants want that level of transparency.”

Under the federal rules for 401(k) fee disclosure, meanwhile, plans must disclose in annual statements distributed to participants the cost to workers of investing in the plans and the performance of the investment options, including any collective trusts.

Collective trusts must also issue certain disclosure documents to employers. Examples include an audited annual financial statement detailing the collective trust’s fiscal year-end holdings or a document—often called an offering memorandum or an offering circular—that broadly resembles a mutual-fund prospectus, according to John Schadl, principal and head of Vanguard Group’s Erisa and Fiduciary Services.

Many of those documents are available to 401(k) participants upon request, he adds.

Write to Anne Tergesen at anne.tergesen@wsj.com