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ETF asterisk clause meaning


US or UK based ETF Index funds for UK investor?Must ETF companies match an investor's amount invested in an ETF?Is there an ETF/index fund respecting my individual ethical preferences?What's the simplest, cheapest way to reproduce the WMA private investor indices's “income index”?Difference between Bull and Bear 2X ETF?How does the market adjust for fees in ETPs?Risk of basic (Bull 1x) ETFWhy does the price of the basic (Bull 1x) index ETF fluctuate intra-day?ETF annual expense ratio: how to calculate on a portfolio?How exactly does a broad-market ETF work?













3















I'm choosing an ETF, and reading this KII document, I'm not sure what this sentence means.



  1. Can anybody expand this language with an example?

  2. Is this typical for an ETF?


To the extent the Fund undertakes securities lending to reduce costs,
the Fund will receive 62.5% of the associated revenue generated and
the remaining
37.5% will be received by BlackRock as the securities lending agent. As securities lending revenue sharing does not increase the costs of
running the Fund, this has been excluded from the ongoing charges.




Source










share|improve this question









New contributor




sscarduzio is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
























    3















    I'm choosing an ETF, and reading this KII document, I'm not sure what this sentence means.



    1. Can anybody expand this language with an example?

    2. Is this typical for an ETF?


    To the extent the Fund undertakes securities lending to reduce costs,
    the Fund will receive 62.5% of the associated revenue generated and
    the remaining
    37.5% will be received by BlackRock as the securities lending agent. As securities lending revenue sharing does not increase the costs of
    running the Fund, this has been excluded from the ongoing charges.




    Source










    share|improve this question









    New contributor




    sscarduzio is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
    Check out our Code of Conduct.






















      3












      3








      3








      I'm choosing an ETF, and reading this KII document, I'm not sure what this sentence means.



      1. Can anybody expand this language with an example?

      2. Is this typical for an ETF?


      To the extent the Fund undertakes securities lending to reduce costs,
      the Fund will receive 62.5% of the associated revenue generated and
      the remaining
      37.5% will be received by BlackRock as the securities lending agent. As securities lending revenue sharing does not increase the costs of
      running the Fund, this has been excluded from the ongoing charges.




      Source










      share|improve this question









      New contributor




      sscarduzio is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
      Check out our Code of Conduct.












      I'm choosing an ETF, and reading this KII document, I'm not sure what this sentence means.



      1. Can anybody expand this language with an example?

      2. Is this typical for an ETF?


      To the extent the Fund undertakes securities lending to reduce costs,
      the Fund will receive 62.5% of the associated revenue generated and
      the remaining
      37.5% will be received by BlackRock as the securities lending agent. As securities lending revenue sharing does not increase the costs of
      running the Fund, this has been excluded from the ongoing charges.




      Source







      investing etf index-fund lending documents






      share|improve this question









      New contributor




      sscarduzio is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
      Check out our Code of Conduct.











      share|improve this question









      New contributor




      sscarduzio is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
      Check out our Code of Conduct.









      share|improve this question




      share|improve this question








      edited 13 hours ago









      Ben Miller

      80.5k20220288




      80.5k20220288






      New contributor




      sscarduzio is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
      Check out our Code of Conduct.









      asked 14 hours ago









      sscarduziosscarduzio

      1162




      1162




      New contributor




      sscarduzio is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
      Check out our Code of Conduct.





      New contributor





      sscarduzio is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
      Check out our Code of Conduct.






      sscarduzio is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
      Check out our Code of Conduct.




















          2 Answers
          2






          active

          oldest

          votes


















          5














          The quote you are asking about is a footnote to the fund expenses/fees, which is listed as 0.26%. I’m not completely sure, but I believe that this note is saying that the fund sometimes lends out its assets (as you might do for someone who is shorting stock), and the revenue generated by that activity might lower the expenses beyond the percentage listed. As a result, the expense number shown is a maximum.






          share|improve this answer






























            3














            When shares are borrowed for the purpose of shorting, a borrow is fee charged by the brokerage firm to a client who borrows the shares. If the broker does not have lendable shares in house, it will have to borrow the shares from another broker to effect this and the brokers will share the fee. Some brokers share a portion of this fee with the lender (owner) of the securities.



            Further down the page in your link it says:




            The Fund may also engage in short-term secured lending of its investments to certain eligible third parties. This is used as a means of generating additional income and to off-set the costs of the Fund.




            Per the two links, if this ETF lends the shares, the Fund will receive 62.5% borrow fee, lowering operational costs.






            share|improve this answer























            • Thank you for your explanation! However, isn't shorting done using derivative instruments (i.e. futures)? How comes these become part of an ETF portfolio? I thought ETFs would just make sure their portfolio mirrors the top N capitalised stocks in an index at all times. 🤔

              – sscarduzio
              10 hours ago






            • 2





              You can short using derivatives, but you can "just" short the old fashioned way. Sell stocks you don't have at today's price, in order to buy them back again (and complete the order) within the next 30 days. Used to be you could do this without any stock - a naked short - but this caused really big problems when a lot of people did it - and more stock was 'shorted' than actually existed. So now you have to borrow instead.

              – Sobrique
              10 hours ago











            • @sscarduzio - An ETF is a security that is comprised of equities, bonds, etc., depending on the nature of the ETF. In the US, it can be shorted as long as it is borrowable. I don't know UK regulatory rules. LOL. Notification with a @ in front of your handle changes the tone of things :->)

              – Bob Baerker
              10 hours ago












            • @Sobrique - Is the requirement that you cover within 30 days a UK regulatory rule?

              – Bob Baerker
              10 hours ago











            • @sscarduzio The ETF isn't the one shorting anything here. Somebody else wants to short something the ETF owns, and the ETF is getting paid for lending them the stock. For something like an ETF that expects to hold something long term, this is a fairly reasonable way to make extra money at the expense of liquidity.

              – mbrig
              8 hours ago










            Your Answer








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            2 Answers
            2






            active

            oldest

            votes








            2 Answers
            2






            active

            oldest

            votes









            active

            oldest

            votes






            active

            oldest

            votes









            5














            The quote you are asking about is a footnote to the fund expenses/fees, which is listed as 0.26%. I’m not completely sure, but I believe that this note is saying that the fund sometimes lends out its assets (as you might do for someone who is shorting stock), and the revenue generated by that activity might lower the expenses beyond the percentage listed. As a result, the expense number shown is a maximum.






            share|improve this answer



























              5














              The quote you are asking about is a footnote to the fund expenses/fees, which is listed as 0.26%. I’m not completely sure, but I believe that this note is saying that the fund sometimes lends out its assets (as you might do for someone who is shorting stock), and the revenue generated by that activity might lower the expenses beyond the percentage listed. As a result, the expense number shown is a maximum.






              share|improve this answer

























                5












                5








                5







                The quote you are asking about is a footnote to the fund expenses/fees, which is listed as 0.26%. I’m not completely sure, but I believe that this note is saying that the fund sometimes lends out its assets (as you might do for someone who is shorting stock), and the revenue generated by that activity might lower the expenses beyond the percentage listed. As a result, the expense number shown is a maximum.






                share|improve this answer













                The quote you are asking about is a footnote to the fund expenses/fees, which is listed as 0.26%. I’m not completely sure, but I believe that this note is saying that the fund sometimes lends out its assets (as you might do for someone who is shorting stock), and the revenue generated by that activity might lower the expenses beyond the percentage listed. As a result, the expense number shown is a maximum.







                share|improve this answer












                share|improve this answer



                share|improve this answer










                answered 13 hours ago









                Ben MillerBen Miller

                80.5k20220288




                80.5k20220288























                    3














                    When shares are borrowed for the purpose of shorting, a borrow is fee charged by the brokerage firm to a client who borrows the shares. If the broker does not have lendable shares in house, it will have to borrow the shares from another broker to effect this and the brokers will share the fee. Some brokers share a portion of this fee with the lender (owner) of the securities.



                    Further down the page in your link it says:




                    The Fund may also engage in short-term secured lending of its investments to certain eligible third parties. This is used as a means of generating additional income and to off-set the costs of the Fund.




                    Per the two links, if this ETF lends the shares, the Fund will receive 62.5% borrow fee, lowering operational costs.






                    share|improve this answer























                    • Thank you for your explanation! However, isn't shorting done using derivative instruments (i.e. futures)? How comes these become part of an ETF portfolio? I thought ETFs would just make sure their portfolio mirrors the top N capitalised stocks in an index at all times. 🤔

                      – sscarduzio
                      10 hours ago






                    • 2





                      You can short using derivatives, but you can "just" short the old fashioned way. Sell stocks you don't have at today's price, in order to buy them back again (and complete the order) within the next 30 days. Used to be you could do this without any stock - a naked short - but this caused really big problems when a lot of people did it - and more stock was 'shorted' than actually existed. So now you have to borrow instead.

                      – Sobrique
                      10 hours ago











                    • @sscarduzio - An ETF is a security that is comprised of equities, bonds, etc., depending on the nature of the ETF. In the US, it can be shorted as long as it is borrowable. I don't know UK regulatory rules. LOL. Notification with a @ in front of your handle changes the tone of things :->)

                      – Bob Baerker
                      10 hours ago












                    • @Sobrique - Is the requirement that you cover within 30 days a UK regulatory rule?

                      – Bob Baerker
                      10 hours ago











                    • @sscarduzio The ETF isn't the one shorting anything here. Somebody else wants to short something the ETF owns, and the ETF is getting paid for lending them the stock. For something like an ETF that expects to hold something long term, this is a fairly reasonable way to make extra money at the expense of liquidity.

                      – mbrig
                      8 hours ago















                    3














                    When shares are borrowed for the purpose of shorting, a borrow is fee charged by the brokerage firm to a client who borrows the shares. If the broker does not have lendable shares in house, it will have to borrow the shares from another broker to effect this and the brokers will share the fee. Some brokers share a portion of this fee with the lender (owner) of the securities.



                    Further down the page in your link it says:




                    The Fund may also engage in short-term secured lending of its investments to certain eligible third parties. This is used as a means of generating additional income and to off-set the costs of the Fund.




                    Per the two links, if this ETF lends the shares, the Fund will receive 62.5% borrow fee, lowering operational costs.






                    share|improve this answer























                    • Thank you for your explanation! However, isn't shorting done using derivative instruments (i.e. futures)? How comes these become part of an ETF portfolio? I thought ETFs would just make sure their portfolio mirrors the top N capitalised stocks in an index at all times. 🤔

                      – sscarduzio
                      10 hours ago






                    • 2





                      You can short using derivatives, but you can "just" short the old fashioned way. Sell stocks you don't have at today's price, in order to buy them back again (and complete the order) within the next 30 days. Used to be you could do this without any stock - a naked short - but this caused really big problems when a lot of people did it - and more stock was 'shorted' than actually existed. So now you have to borrow instead.

                      – Sobrique
                      10 hours ago











                    • @sscarduzio - An ETF is a security that is comprised of equities, bonds, etc., depending on the nature of the ETF. In the US, it can be shorted as long as it is borrowable. I don't know UK regulatory rules. LOL. Notification with a @ in front of your handle changes the tone of things :->)

                      – Bob Baerker
                      10 hours ago












                    • @Sobrique - Is the requirement that you cover within 30 days a UK regulatory rule?

                      – Bob Baerker
                      10 hours ago











                    • @sscarduzio The ETF isn't the one shorting anything here. Somebody else wants to short something the ETF owns, and the ETF is getting paid for lending them the stock. For something like an ETF that expects to hold something long term, this is a fairly reasonable way to make extra money at the expense of liquidity.

                      – mbrig
                      8 hours ago













                    3












                    3








                    3







                    When shares are borrowed for the purpose of shorting, a borrow is fee charged by the brokerage firm to a client who borrows the shares. If the broker does not have lendable shares in house, it will have to borrow the shares from another broker to effect this and the brokers will share the fee. Some brokers share a portion of this fee with the lender (owner) of the securities.



                    Further down the page in your link it says:




                    The Fund may also engage in short-term secured lending of its investments to certain eligible third parties. This is used as a means of generating additional income and to off-set the costs of the Fund.




                    Per the two links, if this ETF lends the shares, the Fund will receive 62.5% borrow fee, lowering operational costs.






                    share|improve this answer













                    When shares are borrowed for the purpose of shorting, a borrow is fee charged by the brokerage firm to a client who borrows the shares. If the broker does not have lendable shares in house, it will have to borrow the shares from another broker to effect this and the brokers will share the fee. Some brokers share a portion of this fee with the lender (owner) of the securities.



                    Further down the page in your link it says:




                    The Fund may also engage in short-term secured lending of its investments to certain eligible third parties. This is used as a means of generating additional income and to off-set the costs of the Fund.




                    Per the two links, if this ETF lends the shares, the Fund will receive 62.5% borrow fee, lowering operational costs.







                    share|improve this answer












                    share|improve this answer



                    share|improve this answer










                    answered 12 hours ago









                    Bob BaerkerBob Baerker

                    17.7k12653




                    17.7k12653












                    • Thank you for your explanation! However, isn't shorting done using derivative instruments (i.e. futures)? How comes these become part of an ETF portfolio? I thought ETFs would just make sure their portfolio mirrors the top N capitalised stocks in an index at all times. 🤔

                      – sscarduzio
                      10 hours ago






                    • 2





                      You can short using derivatives, but you can "just" short the old fashioned way. Sell stocks you don't have at today's price, in order to buy them back again (and complete the order) within the next 30 days. Used to be you could do this without any stock - a naked short - but this caused really big problems when a lot of people did it - and more stock was 'shorted' than actually existed. So now you have to borrow instead.

                      – Sobrique
                      10 hours ago











                    • @sscarduzio - An ETF is a security that is comprised of equities, bonds, etc., depending on the nature of the ETF. In the US, it can be shorted as long as it is borrowable. I don't know UK regulatory rules. LOL. Notification with a @ in front of your handle changes the tone of things :->)

                      – Bob Baerker
                      10 hours ago












                    • @Sobrique - Is the requirement that you cover within 30 days a UK regulatory rule?

                      – Bob Baerker
                      10 hours ago











                    • @sscarduzio The ETF isn't the one shorting anything here. Somebody else wants to short something the ETF owns, and the ETF is getting paid for lending them the stock. For something like an ETF that expects to hold something long term, this is a fairly reasonable way to make extra money at the expense of liquidity.

                      – mbrig
                      8 hours ago

















                    • Thank you for your explanation! However, isn't shorting done using derivative instruments (i.e. futures)? How comes these become part of an ETF portfolio? I thought ETFs would just make sure their portfolio mirrors the top N capitalised stocks in an index at all times. 🤔

                      – sscarduzio
                      10 hours ago






                    • 2





                      You can short using derivatives, but you can "just" short the old fashioned way. Sell stocks you don't have at today's price, in order to buy them back again (and complete the order) within the next 30 days. Used to be you could do this without any stock - a naked short - but this caused really big problems when a lot of people did it - and more stock was 'shorted' than actually existed. So now you have to borrow instead.

                      – Sobrique
                      10 hours ago











                    • @sscarduzio - An ETF is a security that is comprised of equities, bonds, etc., depending on the nature of the ETF. In the US, it can be shorted as long as it is borrowable. I don't know UK regulatory rules. LOL. Notification with a @ in front of your handle changes the tone of things :->)

                      – Bob Baerker
                      10 hours ago












                    • @Sobrique - Is the requirement that you cover within 30 days a UK regulatory rule?

                      – Bob Baerker
                      10 hours ago











                    • @sscarduzio The ETF isn't the one shorting anything here. Somebody else wants to short something the ETF owns, and the ETF is getting paid for lending them the stock. For something like an ETF that expects to hold something long term, this is a fairly reasonable way to make extra money at the expense of liquidity.

                      – mbrig
                      8 hours ago
















                    Thank you for your explanation! However, isn't shorting done using derivative instruments (i.e. futures)? How comes these become part of an ETF portfolio? I thought ETFs would just make sure their portfolio mirrors the top N capitalised stocks in an index at all times. 🤔

                    – sscarduzio
                    10 hours ago





                    Thank you for your explanation! However, isn't shorting done using derivative instruments (i.e. futures)? How comes these become part of an ETF portfolio? I thought ETFs would just make sure their portfolio mirrors the top N capitalised stocks in an index at all times. 🤔

                    – sscarduzio
                    10 hours ago




                    2




                    2





                    You can short using derivatives, but you can "just" short the old fashioned way. Sell stocks you don't have at today's price, in order to buy them back again (and complete the order) within the next 30 days. Used to be you could do this without any stock - a naked short - but this caused really big problems when a lot of people did it - and more stock was 'shorted' than actually existed. So now you have to borrow instead.

                    – Sobrique
                    10 hours ago





                    You can short using derivatives, but you can "just" short the old fashioned way. Sell stocks you don't have at today's price, in order to buy them back again (and complete the order) within the next 30 days. Used to be you could do this without any stock - a naked short - but this caused really big problems when a lot of people did it - and more stock was 'shorted' than actually existed. So now you have to borrow instead.

                    – Sobrique
                    10 hours ago













                    @sscarduzio - An ETF is a security that is comprised of equities, bonds, etc., depending on the nature of the ETF. In the US, it can be shorted as long as it is borrowable. I don't know UK regulatory rules. LOL. Notification with a @ in front of your handle changes the tone of things :->)

                    – Bob Baerker
                    10 hours ago






                    @sscarduzio - An ETF is a security that is comprised of equities, bonds, etc., depending on the nature of the ETF. In the US, it can be shorted as long as it is borrowable. I don't know UK regulatory rules. LOL. Notification with a @ in front of your handle changes the tone of things :->)

                    – Bob Baerker
                    10 hours ago














                    @Sobrique - Is the requirement that you cover within 30 days a UK regulatory rule?

                    – Bob Baerker
                    10 hours ago





                    @Sobrique - Is the requirement that you cover within 30 days a UK regulatory rule?

                    – Bob Baerker
                    10 hours ago













                    @sscarduzio The ETF isn't the one shorting anything here. Somebody else wants to short something the ETF owns, and the ETF is getting paid for lending them the stock. For something like an ETF that expects to hold something long term, this is a fairly reasonable way to make extra money at the expense of liquidity.

                    – mbrig
                    8 hours ago





                    @sscarduzio The ETF isn't the one shorting anything here. Somebody else wants to short something the ETF owns, and the ETF is getting paid for lending them the stock. For something like an ETF that expects to hold something long term, this is a fairly reasonable way to make extra money at the expense of liquidity.

                    – mbrig
                    8 hours ago










                    sscarduzio is a new contributor. Be nice, and check out our Code of Conduct.









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