The Dirty Little Secret of ETFs Is a Selling Point for This Fund Veteran
- Securities lending acts as a hedge for new fund’s strategy
- The practice offsets management fees, which hurt returns
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Brad Lamensdorf is an unlikely whistle-blower on the inner workings of exchange-traded funds.
A hedge fund alumnus and now chief executive of a tiny ETF startup, Lamensdorf has long been aware of the sometimes embarrassing secret at the heart of these funds: securities lending. Now the expert in so-called long-short strategies -- buying stocks expected to increase in value while selling those projected to fall -- is shining a light on the practice with his newest fund, and trying to make a buck for investors at the same time.