Securities Lending: An Examination of the Risks and Rewards

As investment-management fees for many index mutual funds and exchange-traded funds converge at near-zero levels, securities-lending programs’ contribution to performance and potential to differentiate increasingly commoditized funds have come into sharper focus. In this paper, we explain why we believe the benefits of securities lending to fundholders outweigh the risks.

In this paper, you will learn:
  • How a typical securities lending transaction plays out
  • Why the risk entailed from securities lending today is less than in the past
  • How U.S. fund sponsors approach securities lending

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