Morningstar says benefits of securities lending to fundholders outweigh the risks

Securities Lending: An Examination of the Risks and Rewards
By Adam McCullough | 11 December 2018

Securities lending carries risk, but the risk entailed today is less than in the past. Increased regulation has reduced the risk of losses from securities lending to index mutual fund and ETF investors. We believe the benefits of securities lending to fundholders outweigh the risks. That said, fund fees and index/portfolio construction will typically have a far greater influence on investment performance than securities-lending income.

The full paper is available at https://corporate1.morningstar.com/ResearchArticle.aspx?documentId=904500

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