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Vanguard starts securities lending

16 London-listed Vanguard ETFs will start to boost their income via securities lending
January 12, 2017

ETF provider Vanguard is allowing 16 of its London-listed exchange traded funds (ETFs) to lend securities. Prior to 21 November 2016 no Vanguard ETFs lent out the assets they held, a practice that a number of ETFs engage in to generate extra income, but which is disliked by some investors due to the additional risk it incurs.

"A highly risk-controlled and conservative securities lending programme can add value for our clients by providing an additional source of low-risk, incremental return for our funds," says Vanguard. "We return 100 per cent of securities lending revenues, net of programme costs, to the funds so there is a clear alignment of risk and reward in the best interests of our clients."

Under the securities lending programmes, Vanguard will loan out some of its securities in return for a fee and a basket of collateral posted by the borrower. In the case of borrower default Vanguard would take ownership of the basket of collateral which it could sell.

The following Vanguard ETFs will have the ability to lend out the securities they hold.

 

Vanguard S&P 500 UCITS ETF
Vanguard FTSE 100 UCITS ETF
Vanguard FTSE All-World UCITS ETF
Vanguard FTSE Emerging Markets UCITS ETF
Vanguard FTSE Developed Europe UCITS ETF
Vanguard FTSE Developed Asia Pacific ex Japan UCITS ETF
Vanguard FTSE Japan UCITS ETF
Vanguard FTSE All-World High Dividend Yield UCITS ETF
Vanguard FTSE 250 UCITS ETF
Vanguard FTSE Developed World UCITS ETF
Vanguard FTSE North America UCITS ETF
Vanguard FTSE Developed Europe ex UK UCITS ETF
Vanguard Global Liquidity Factor UCITS ETF
Vanguard Global Minimum Volatility UCITS ETF
Vanguard Global Momentum Factor UCITS ETF
Vanguard Global Value Factor UCITS ETF 
Source: Vanguard