Record year for securities lending revenues
17 December 2018 London
Image: Shutterstock
End-of-year reports this month are expected to reveal that asset managers and banks made $10 billion through securities lending, according to industry commentators.
The first half of the year saw global money managers alone generate nearly $6 billion in revenue by loaning out stocks and bonds, which was the best performance since before the financial crisis of 2008.
It was also revealed that 36 percent of investment managers are now viewing securities lending as a key strategy for offsetting rising costs.
With costs outpacing organic assets under management and profits under pressure, investors are turning to alternative strategies in search of alpha and cost offsetting.
Market commentators have predicted that the growing market for asset lending could ‘explode’ in 2019, as fund managers and banks seek new revenue streams amid rising costs and a global squeeze on profits.
Meanwhile, operational costs for European fund managers had risen 5 percent year-on-year at the end of 2017 compared with just a 3 percent increase in assets over the same period, McKinsey research found.
According to the McKinsey research, total costs for asset managers over the past ten years have increased by 60 percent.
Boaz Yaari, CEO and founder of Sharegain, commented: “Change is coming. Market forces are driving demand for securities lending to become a more accessible, transparent, performant market–this is a $2.5 trillion secret that’s about to be opened up to every investor, from the world’s largest funds through to, eventually, even consumers.”
He continued: “Financial markets are enduring their worst year in a decade - but it’s not all doom and gloom. Whether you’re a global institution looking for alpha in a low-yield, high-cost environment, or a family office seeking a simple way to improve returns, securities lending is becoming an increasingly attractive option.”
Yaari added: “Revenues have already returned to the highest levels in a decade–and we could see it explode into the mainstream as a go-to tactic among investors next year.”
The first half of the year saw global money managers alone generate nearly $6 billion in revenue by loaning out stocks and bonds, which was the best performance since before the financial crisis of 2008.
It was also revealed that 36 percent of investment managers are now viewing securities lending as a key strategy for offsetting rising costs.
With costs outpacing organic assets under management and profits under pressure, investors are turning to alternative strategies in search of alpha and cost offsetting.
Market commentators have predicted that the growing market for asset lending could ‘explode’ in 2019, as fund managers and banks seek new revenue streams amid rising costs and a global squeeze on profits.
Meanwhile, operational costs for European fund managers had risen 5 percent year-on-year at the end of 2017 compared with just a 3 percent increase in assets over the same period, McKinsey research found.
According to the McKinsey research, total costs for asset managers over the past ten years have increased by 60 percent.
Boaz Yaari, CEO and founder of Sharegain, commented: “Change is coming. Market forces are driving demand for securities lending to become a more accessible, transparent, performant market–this is a $2.5 trillion secret that’s about to be opened up to every investor, from the world’s largest funds through to, eventually, even consumers.”
He continued: “Financial markets are enduring their worst year in a decade - but it’s not all doom and gloom. Whether you’re a global institution looking for alpha in a low-yield, high-cost environment, or a family office seeking a simple way to improve returns, securities lending is becoming an increasingly attractive option.”
Yaari added: “Revenues have already returned to the highest levels in a decade–and we could see it explode into the mainstream as a go-to tactic among investors next year.”
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