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The Lending Program
Security lending is an investment process whereby an institutional fund may lend
securities from its portfolio to enhance the funds’ income. Capital Advisors
emphasizes the investment approach to lending. In the early 1980’s the
Department of Labor wrote procedures that permitted pension funds to lend their
securities. These guidelines are by definition very prudent and Capital Advisors
program meets all these guidelines whether their client is an ERISA covered
pension fund or some other institutional fund.
Lending Program Features
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Meets all Department of Labor guidelines
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Computerized reports detail a clear record of client
earnings as well as a detailed audit trail by loan
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Capital Advisors never takes possession of cash or
securities (All trades flow through client’s custodial bank)
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Monthly reconciliation of Capital Advisors activity to
client’s bank statements
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High liquidity factor to all investments
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Lending fixed income and equity securities both foreign
and domestic
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Lending Reports and
Account Administration
Capital Advisors tracks each securities lending transaction with
their proprietary software which generates concise, easy-to-read customized
daily reports for each aspect of the securities lending process. Each report is
truly an easily understood management information report.
Summary Report Example
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Capital Advisors, Inc. Securities Lending Program
Summary Report - Daily Recap - Client Name
00/00/00 |
| |
00/00/00 |
MTD |
YTD |
SINCE
INCEPTION |
| Loan
Expense |
00000000 |
00000000 |
00000000 |
00000000 |
| Reinv
Income |
00000000 |
00000000 |
00000000 |
00000000 |
Daily
Earnings
Fee |
00000000
00000000 |
00000000
00000000 |
00000000
00000000 |
00000000
00000000 |
| Net
Earnings |
00000000 |
00000000 |
00000000 |
00000000 |
Daily
Spread
(Dollar Weighted) |
00000000 |
|
|
|
Spread
History
Arithmetic Average
(Trailing 30 Days) |
|
00000000 - |
Cost
00000000 = |
Spread
00000000 |
Daily
Spread
Dollar Weighted Average
(Trailing 30 Days) |
|
|
|
00000000 |
Securities Lending
Example Transaction
To simplify the process, lending is The Purchase and Sale of Money.
1. Purchase of Money via Securities Loan for Cash. . . . .
. . . . . . . . . . . . . Expense
2. Sale of Money via Reinvestment of Cash. . . . . . . . .
. . . . . . . . . . . . . . . . . Revenue
The purchase of money is created when portfolio securities are lent for
collateral consisting of cash. Securities are generally lent to major
broker-dealers, the cash received creates the expense side of the equation by
nature of the interest charged on the cash.
The sale of money is created when the cash collateral is then reinvested in
money market investments at a higher rate than the interest expense thus
creating the incremental income for the client portfolio.
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