UBS sets 50% limit on ETF securities lending

UBS is formally reducing securities lending on its ETF funds to 50%, following in the footsteps of ETF giant iShares.

Securities lending is a common practice for ETFs, which sees them lending out shares of underlying holdings to a third party for a price, with the aim to cover the expenses and management charges that may be a drag on the end return to an investor. Although providers claim this practice can significantly enhance returns, it has come under scrutiny in recent years after investors suffered losses during the financial crisis from investments in riskier assets. Securities lending is also considered controversial as the counterparty may be shorting the stock. According to the European U...