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It's also more complex than simply measuring how much of the securities lending revenue ends up back in the fund. Most of that 60% for Fidelity's funds don't e
by tanderson92 8y ago
It's also more complex than simply measuring how much of the securities lending revenue ends up back in the fund.
Most of that 60% for Fidelity's funds don't end up back in Fidelity's pockets either, but instead in the pockets of the people who borrowed stock from Fidelity investors in the form of rebates. You can understand this like: the borrower puts up 100-105% of the collateral and so should get some portion of the short-term rate on that cash. It's not clear why the disparity exists between Vanguard and Fidelity though.
iShares is truly different where they actually take 15-30% of profits for themselves.
- jorblumesea 8y agoThe disparity to me is obvious; vanguard is a mutually owned company, whereas the others are for-profit. When you buy vanguard, you're buying vanguard itself, not just a product from them.
- tanderson92 8y agoI already explained that while 60% of the revenue doesn't go to the fund investors, it doesn't go to Fidelity either. If you look at the Statement of Additional Informtaion for the fund, 56.7% goes back to the borrower (not Fidelity, the security borrower) in the form of a rebate. The profit motive doesn't explain this, at least not in the simple framing you've made of the issue.