iShares Short Changes Investors on Lending Income

Fund managers make extra money by lending shares to short sellers.  In some cases the interest rate can be as high as an annualized 120%.  Some of that extra money goes to the fund investors and some goes to the manager.

Turns out that in the case of the iShares Dow Jones US Financial ETF (IYG)iShares only shared half of the extra money with ETF investors according to a Heard on the Street column in the WSJState Street and Vanguard are much more generous, sharing 85% and 99.5% of any stock lending income respectively.

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