Frequently Asked Questions
Who are the lenders? And why are they lending?
Principally, every owner of stocks, bonds and ETFs has the right to lend them. However, for decades the practice has been largely confined to big financial institutions who have made billions of dollars from renting out their securities. Many active and passive fund managers, such as mutual funds and ETFs, engage in securities lending to help boost a fund’s performance or to offset the costs of managing a portfolio.
Securities lending is a great source of alpha as it opens up a new stream of revenue on assets you already own, irrespective of their price movement. Given the opaqueness of this industry, many investors are unaware of the hidden value of their portfolio.