Securities Lending Definition
Learn the definition of securities lending and other ETF terminology from the etf.com glossary.
Learn more about Securities Lending
Securities Lending is a strategic practice employed by ETFs to enhance overall fund returns. In this process, ETFs lend out a portion of their portfolio securities to institutional borrowers, typically in exchange for collateral. By temporarily transferring ownership of these securities, ETFs generate additional income, supplementing their returns for the benefit of investors. While this practice introduces a level of risk associated with the borrower's ability to return the securities, diligent collateral management mitigates these risks, making securities lending a valuable tool for ETF managers seeking to optimize the fund's performance and provide enhanced value to investors.
