Securities lending explained

Beta

In finance, the beta (β) indicates whether an investment is more – or less – volatile than the market as a whole. In other words, beta is a measure of the risk arising from exposure to general market movements, and this is also known as the systematic risk.

Beta is used to assess and compare the amount of risk an investment adds to an already diversified portfolio. This means it is an important metric for measuring the risk exposure across investment strategies when that risk cannot be reduced through diversification.

A portfolio of all investable assets within the market has a beta of exactly one. A beta of less than one is indicative of either an investment with lower volatility than the market e.g. a government bond or else an investment with high volatility, whose price movements are not highly correlated with the market e.g. gold. A negative beta describes an investment that tends to increase in price when the general market price falls and vice versa. Securities Lending is an example of an investment strategy which has a negative beta. This is because, as the returns available from the market fall, lending rates will generally rise.

Have more questions?





Sharegain Ltd. is registered in England and Wales (no. 09600298) and is authorised and regulated by the Financial Conduct Authority (no. 730395).
*This website is directed exclusively at and intended to be used only by professional investors and retail investors with direct holdings in stocks, bonds and ETFs in excess of £500,000. Our website is not directed at any person or institution where (by reason of nationality, residence or otherwise) the availability of our website or securities lending in general is prohibited. The material on this website is for general information and should not be considered as investment advice or solicitation to be involved in securities lending or to use one of Sharegain’s services. Securities lending involves risks and we have not and will not assess whether our service is appropriate for you. If you decide to lend your securities, your capital may be at risk. Please consult professional advisors if you are in any doubt as to whether the service would be beneficial for you or whether you require any consent or need to observe any formalities, before deciding to engage in securities lending.
© Copyright 2019 Sharegain Ltd

+44 (0) 20 3884 2405        info@sharegain.com        9 Dallington St, London EC1V 0LN