Over the past several decades, securities lending has evolved into a vital component of the financial markets and an important benefit for fund investors.

Frequently asked questions

  • What is securities lending?

    Securities lending is when funds make short-term loans of its assets (e.g. stocks or bonds) to incrementally increase returns for investors.

  • How does it work?

    First, a large financial institution asks to temporarily borrow a stock or bond from a fund. In order to borrow the stock or bond, the financial company must pay a fee and provide collateral to the fund.

    The fund keeps the collateral to secure repayment in case the borrower fails to return the loaned stock or bond. The value of the collateral must exceed the value of the loaned stock or bond, to provide the fund with a "safety cushion" to prevent loss if the borrower doesn't return the security.

  • How do fund investors benefit from securities lending?

    Investors can benefit from securities lending in the form of better performance. How? The fund can generate additional income through the fee that it charges for lending securities. This has the equivalent effect of offsetting management fees.

  • How much do investors benefit from securities lending?

    The performance contribution varies by fund and asset class. For more information, please read our brochure.

    BlackRock periodically benchmarks its securities lending performance versus competitors using data from independent third-party providers. Over three decades, BlackRock has focused on delivering competitive returns while balancing return, risk and cost.

  • How much securities lending proceeds are returned to investors in BlackRock funds domiciled in Europe?

    Effective May 1st 2014, 62.5% of all securities lending revenues are paid directly into the fund, with BlackRock receiving 37.5% compensation which covers all operational costs.

    We encourage investors to ask fund managers for detail on their securities lending programme, and most importantly, the net returns to investors. When some fund providers may report paying out a higher percentage of the net proceeds from securities lending, they may not clearly disclose the portion of the gross proceeds they pay to their lending agents. BlackRock believes the net returns to fund investors, balanced with appropriate risk and fee disclosure, is the best gauge of investor benefits from securities lending. With BlackRock, there are no hidden fees.

    It is important to remember that some lenders are able to generate more return from a given basket of securities due to their scale, skill, or information advantage.

  • What makes BlackRock’s securities lending different?

    We believe in managing our securities lending operations on our proprietary platforms, rather than outsourcing this important function to a third party as many other investment managers do. To that end, we have built a robust infrastructure so that every element of our lending activity is executed in our clients' best interest and with prudent risk management. Since 1981, BlackRock has delivered positive lending income for every fund that participates in securities lending.

  • Where can I find more information on securities lending practices for BlackRock funds domiciled in Europe?

    BlackRock’s unparalleled risk management capabilities, proprietary technology, and stringent management processes set its securities lending practices apart.

    Discover what makes BlackRock securities lending different

Securities lending process

Regulatory information
BlackRock Advisors (UK) Limited, which is authorised and regulated by the Financial Conduct Authority ('FCA'), having its registered office at 12 Throgmorton Avenue, London, EC2N 2DL, England, Tel +44 (0)20 7743 3000, and the representative office in Switzerland, BlackRock Asset Management Schweiz AG, Zurich Branch, Bahnhofstrasse 39, Postfach 2118 CH-8022 Zürich, has issued this document for access by Professional Clients only and no other person should rely upon the information contained within it.

Restricted investors
This document is not, and under no circumstances is to be construed as an advertisement or any other step in furtherance of a public offering of shares in the United States or Canada. This document is not aimed at persons who are resident in the United States, Canada or any province or territory thereof, where the companies/securities are not authorised or registered for distribution and where no prospectus has been filed with any securities commission or regulatory authority. The companies/securities may not be acquired or owned by, or acquired with the assets of, an ERISA Plan.

Risk warnings
Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested. Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time.

Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy.

This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer.

BlackRock has not considered the suitability of this investment against your individual needs and risk tolerance. The data displayed provides summary information, investment should be made on the basis of the relevant Prospectus which is available from BlackRock Advisors (UK) Limited.