State Street Global Advisors Extends Securities Lending to More ETFs

The firm will add 67 more funds to the program on top of the 22 that are already there.

State Street Global Advisors has expanded its securities lending program across 67 more ETFs as it looks to boost investor income.

In a notice to shareholders, SSGA said two more of its ETF ranges would be enrolled in the program starting on Oct. 25.

The firm already had 22 exchange-traded funds enrolled in securities lending, taking the total number of ETFs eligible to participate in the practice to 89.

 “SSGA believes that a well-managed securities lending program is a valuable portfolio management tool, which provides an additional source of income for fund shareholders,” an SSGA spokesperson said:

“As market perceptions of securities lending programs and appropriate risk controls have evolved since the global financial crisis, SPDR believes that the vast majority of our clients are now comfortable with securities lending and would appreciate the additional revenues associated with a well-managed program.”

The asset-management firm didn’t disclose how much of the ETF’s assets would be subject to securities lending or how much of the revenue would be received back into the ETFs.

SPYD Is in the Program

The enrolled ETFs include 29 fixed-income ETFs and 38 equity ETFs, including the $3.9 billion SPDR Portfolio S&P High Dividend ETF (SPYD) and the $2.9 billion SPDR MSCI World UCITS ETF (SPPW).

State Street’s Securities Finance Agency Lending will act as the lending agent for the program.

None of the ETFs that have been added to the program is an ESG, or environmental, social and governance, strategy, which are often said to compromise the sustainable characteristics of the ETF.

In March, Invesco included ESG ETFs within its securities lending program in a bid to boost the “consistency and price competitiveness of its product range”.

The European Securities and Markets Authority, or ESMA, warned in July that any perceived “indirect benefits” from securities lending on ETFs—such as lower trading commissions­ don’t justify the risks for retail investors.

It came a year after ESMA highlighted concerns about how asset managers split the fees and revenue generated from securities lending.