Securities lending and borrowing: generating additional income

Securities lending is the transfer of equities and bonds (in the form of a loan) for an indefinite period. The securities are ‘lent’ from a special or mutual fund to a lending agent, who pays a fee for the loan of the securities.

Universal-Investment is able to generate additional income for a fund in a simple way via various lending programmes. The yield effects vary in particular for equities lending beyond the dividend date. In these cases, along with the ‘lending fee’ the fund is paid a compensation for the lost dividend, the amount of which depends on the investor’s tax status. This means the fund can generate a higher net income than with the dividend.


In contrast to dividends, the compensation payment is not however covered by the favourable tax status given to shareholder income, which means that equities should only be lent beyond the dividend date if this does not have a negative impact on the investor’s tax status. Our experience will help you find the right solution in such cases.

Collateral of at least 100 %

The ‘lent’ securities are backed by collateral worth at least 100% and must be securities of the same type (e.g. loan of blue chips against blue chip collateral). For reasons of diversification, legislation allows for no more than 10% of the fund’s assets to be ‘lent’ to one counterparty or lending agent (counterparty limit).

The ‘lent’ securities are not however actually removed from the special fund. The composition of the fund and hence the inventory value do not change during a securities lending transaction.

Cooperation with prestigious institutions

Along with prestigious partners, we have drawn up lending programmes for our clients which have already benefited a large number of investors. The programmes are designed not to interfere with the work of the asset managers.