nach oben

Journal of Business Ethics

Erschienen in:

18.03.2015

Securities Lending Activities in Mutual Funds and ETFs: Ethical Considerations

verfasst von: Lee M. Dunham, Randy Jorgensen, Ken Washer

Erschienen in: Journal of Business Ethics | Ausgabe 1/2016

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

Securities lending has been a lucrative business for mutual funds and exchange-traded funds (ETFs) over the past decade. Unfortunately for investors, the sponsors of these funds have not been very transparent with the details of their securities lending programs, and consequently most investors in these funds are unaware of their exposure to the risks inherent in securities lending. Interestingly, most funds do not return the full profits from securities lending activities to their investors. In this paper, we examine and discuss the ethical considerations related to the securities lending activities of mutual funds and ETFs and offer a series of best practices that we believe will provide better transparency of these activities to fund investors.

Vorheriger Artikel Using Traditional Narratives and Other Narrative Devices to Enact Humanizing Business Practices

Nächster Artikel Financial Disclosure and Customer Satisfaction: Do Companies Talking the Talk Actually Walk the Walk?

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Short selling, or shorting, is the process of borrowing securities from one party (the lender) and immediately selling them to another party. The objective is to earn a profit by later repurchasing the borrowed securities at a lower price and returning them to the lender.

Securities Lending: Still No Free Lunch. Publication by Vanguard, July 2011.

See BlackRock Securities Lending: Unlocking the Potential of Portfolios, June 2014.

See Bank of England’s Quarterly Bulletin, 2011 third quarter report p. 224–233.

For actively managed mutual funds, when a fund underperforms its benchmark, it is referred to as underperformance. For passively managed index mutual funds and ETFs, such underperformance is referred to as tracking error since the index fund/ETF is supposedly just passively invested in a benchmark and not being actively managed.

An index change occurs when a company is deleted from a stock index and another company is added. Index changes to indices such as the S&P 500 occur for numerous reasons, including but not limited to an index company being acquired, going bankrupt, or no longer meeting index requirements (e.g., minimum market capitalization).

Securities Lending Best Practices, 2012 report by eSEC Lending.

Practical Guidance for Fund Directors on the Oversight of Securities Lending (May 2012), by the Mutual Fund Directors Forum.

The Code of Ethics and Standards of Professional Conduct can be viewed at http://www.cfapubs.org/doi/pdf/10.2469/ccb.v2014.n6.1.

Bioy, H., & G. Rose. (2012). Securities lending in physical replication ETFs: A review of providers’ practices. Morningstar ETF Research, pp. 1–33.

Chen, H., Noronha, G., & Singal, V. (2006). Index changes and losses to index fund investors. Financial Analysts Journal, 62, 31–47.CrossRef

Chiang, W. (1998). Optimizing Performance. In A. Neubert (Ed.), Indexing for maximum investment results. Chicago: GPCo Publishers.

Christoffersen, S., Geczy, C., Musto, D., & Reed, A. (2007). Vote trading and information aggregation. Journal of Finance, 62, 2897–2929.CrossRef

Dunham, L., & T. Simpson. (2014). An analysis of the impact of securities lending on the performance of ETFs, Working paper.

Dunham, L., & Simpson, T. (2010). Do index fund managers trade opportunistically around index changes? An empirical examination of S&P 500 index funds. Journal of Index Investing, 1, 58–64.CrossRef

Dunham, L., & Simpson, T. (2012). The impact of securities lending on index fund performance. Journal of Investing, 21, 9–16.CrossRef

Edelen, R. (1999). Investor flows and the assessed performance of open-end mutual funds. Journal of Financial Economics, 53, 439–466.CrossRef

Frino, A., & Gallagher, D. (2001). Tracking S&P 500 index funds. Journal of Portfolio Management, 28, 44–55.CrossRef

Kohlberg, L., Levine, C., & Hewer, A. (1983). Moral stages: A current formulation and a response to critics. In J. A. Meacham (Ed.), Contributions to human development (Vol. 10). New York: Karger.

Kostovetsky, L. (2003). Index mutual funds and exchange-traded funds. Journal of Portfolio Management, 29, 80–92.CrossRef

Lauricella, T. (2007). SEC discovers breaches in lending securities. Wall Street Journal, January 29.

Moser, S., Van Ness, B., & Van Ness, R. (2013). Securities lending around proxies: Is the increase in lending due to proxy abuse or a result of dividends? Journal of Financial Research, 36, 1–17.CrossRef

Oberlechner, T. (2007). The psychology of ethics in the finance and investment industry. Research Foundation of CFA Institute, Charlottesville

Zweig, J. (2009). Is your fund pawning shares at your expense? Wall Street Journal.

Titel: Securities Lending Activities in Mutual Funds and ETFs: Ethical Considerations
verfasst von: Lee M. Dunham
Randy Jorgensen
Ken Washer
Publikationsdatum: 18.03.2015
Verlag: Springer Netherlands
Erschienen in: Journal of Business Ethics / Ausgabe 1/2016
Print ISSN: 0167-4544
Elektronische ISSN: 1573-0697
DOI: https://doi.org/10.1007/s10551-015-2609-1

Springer Professional

Abstract

Bitte loggen Sie sich ein, um Zugang zu Ihrer Lizenz zu erhalten.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"

Weitere Artikel der Ausgabe 1/2016

Regulation and the Promotion of Audit Ethics: Analysis of the Content of the EU’s Policy

Using Traditional Narratives and Other Narrative Devices to Enact Humanizing Business Practices

Team Conflict Mediates the Effects of Organizational Politics on Employee Performance: A Cross-Level Analysis in China

Do Auditing and Reporting Standards Affect Firms’ Ethical Behaviours? The Moderating Role of National Culture

The Economics of Insider Trading: A Free Market Perspective

Exploring the Legality of Consumer Anti-branding Activities in the Digital Age