ETF lending fuels surge in securities lending revenue
Global securities lending revenue hit record highs in July 2025, fueled by ETF lending growth and rising international equity and ADR activity. Learn how institutional investors can use securities lending for revenue generation, portfolio efficiency, and liquidity management.
For the first time since January 2024, global monthly securities lending revenue has surpassed $1 billion, jumping to $1.455 billion in June 2025 and surging to $1.577 billion in July 2025.1
Interestingly, while securities lending returns tend to thrive on market volatility due to the demand it creates to hedge and make directional market bets by shorting securities, even the sharp swings in the CBOE VIX earlier this year failed to boost lending activity.
So, what changed this summer?
Drivers of securities lending growth
More so than heightened volatility, deep specials like CoreWeave Inc (CRWV) and a fresh wave of meme stocks sparked lending activity. And while loan balances have continued to climb, the spike in lending fees has shown recent signs of leveling off.
International markets also played a role in the resurgence. Year-to-date (YTD) revenue from lending US equities has risen by 12%. Asian equities have surged an impressive 37%.2 And American Depository Receipts (ADRs)—which investors use to access international equities, especially Asian issuers—have jumped by 51%.3
But ETF lending has emerged as the most notable driver of revenue growth, rising sharply from $344 million in 2024 to $626 million year-to-date in 2025.4
Inside and outside ETF lending
As ETFs continue to gain popularity for their liquidity, diversification, and cost-effectiveness, securities lending tied to ETFs has grown in parallel. Both “inside” and “outside” ETF lending aim to generate extra income, but they have distinct differences and implications.
Inside lending refers to the practice where ETF issuers lend out the underlying securities held within the ETF itself—the actual stocks, bonds, or other assets that make up the ETF, not the ETF shares themselves.
This generates income for the ETF that can help offset fund expenses and improve net returns for all shareholders. For example, State Street Investment Management has 126 SPDR® ETFs actively engaged in securities lending. Annualized net return to fund ranges from 0.003bps to 154bps.5
Outside lending refers to the practice where beneficial owners of ETFs—such as institutional investors, asset managers, or custodians—lend out their ETF shares to borrowers in the securities lending market.
Outside lending can be a more powerful driver of performance, with the potential to earn lending returns is significant enough to offset the funds’ fees. It also supports liquidity and price discovery in the secondary market, especially with heavily traded ETFs like the SPDR® S&P 500® ETF Trust (SPY) (Figure 2).
Figure 2: Lending SPY adds to returns and contributes to secondary market efficiency
| Ticker | Fund name | Trailing 1-year average | ||
|---|---|---|---|---|
| VWAF bps | Utilization rate (%) | Gross return on lendable assets (bps) | ||
| SPY | SPDR S&P 500 ETF | 12 | 15 | 1.7 |
| IVV | iShares Core S&P 500 ETF | 11 | 1 | 0.1 |
| VOO | Vanguard S&P 500 ETF | 9 | 2 | 0.2 |
Source: S&P Global, as of June 30, 2025. Estimates are for illustrative purposes only and do not include additional return factors such as agency lending fees, reinvestment fees, or other considerations. VWAF = Volume Weighted Average Fee, “average borrow” or “lender fee”, is the average of the value-weighted average fee of all lender transactions in the S&P Global database for the 30- and 90-day trailing period, as of the fund’s most recent reporting date. Utilization is the average percent of the fund’s net asset on loan, derived by dividing the dollar value of securities on loan from lenders (excluding inter-broker markets) by lendable assets for the 30- and 90-day trailing period, as of the fund’s most recent reporting date.
No representation or warranty is being made to the currency, accuracy, reliability, or completeness of the information nor liability for any decisions made based upon it. Past performance is not a reliable indicator of future performance. Any index information or performance is not meant to represent any specific fund. You cannot invest directly in an index. Additional information on the funds discussed, including standard performance and the prospectus, are available at: https://www.ssga.com/us/en/institutional/fund-finder; https://www.ishares.com/us/products/etf-investments; https://investor.vanguard.com/investment-products/list/etfs respectively.
CITs trending for securities lending participation
Defined contribution (DC) plans are playing a growing role in the securities lending market. As plan sponsors seek cost-effective ways to enhance returns, many are turning to collective investment trusts (CITs)—pooled investment vehicles that offer lower fees than traditional mutual funds.
At State Street Investment Management, we have built significant momentum for securities lending funds with clients investing in CITs. These vehicles allow DC plans to participate in lending programs more efficiently, generating incremental income that can help offset plan costs or improve participant outcomes.
This expansion of lending activity through CITs reflects a broader global trend: more institutional investors are recognizing securities lending as a strategic tool—not just for revenue generation, but for portfolio efficiency and liquidity management.
State Street Investment Management’s Securities Lending Program
A well-managed securities lending program can be a valuable portfolio management tool that increases a fund’s incremental risk-adjusted return.
Our securities lending program focuses on extracting the full intrinsic value of securities lending in a risk-controlled manner and aligning our investment philosophy with our clients’ long-term value principles. We engage with the leading lending agent and cash reinvestment specialists to provide:
- A tailored balance of risk and return
- Robust risk management controls and comprehensive program oversight
- Transparent fee structure and reporting
With ETFs leading the charge and global markets contributing to growth, securities lending is poised to remain a valuable source of incremental return for investors navigating today’s complex environment.