But that could have been more. BlackRock gives between 71.5 percent and 80 percent of lending income to its ETFs, depending on the underlying asset class, and covers costs with its share, a company presentation shows. State Street Corp. gives 85 percent of the proceeds to its funds, according to financial statements. Vanguard Group Inc. meanwhile says it lets its funds keep all net revenue from security lending.
Freddy Martino, a spokesman for Vanguard, said “securities lending is a portfolio management activity of the fund, so the fund shareholders deserve to receive the proceeds.” BlackRock spokeswoman Melissa Garville said the company focuses on delivering competitive returns while balancing return, risk and cost for its clients. A representative for State Street was not immediately able to comment.
As for Active Alts, Lamensdorf said his broker will take 15 percent for arranging the loan, with the remaining profit flowing back to the fund. He also urged investors to pay closer attention to what ETF providers are doing with their holdings.
“People don’t realize how much these companies are taking from them,” Lamensdorf said during an interview at Bloomberg’s New York headquarters earlier this month.
This article was provided by Bloomberg News.