Buying and holding securities in passive investments such as exchange traded funds (ETFs) and index mutual funds (IMFs) saves investors significantly on transaction costs and management fees. A new study by Jesse A. Blocher, assistant professor of finance at Vanderbilt University’s Owen Graduate School of Management and Robert E. Whaley, Valere Blair Potter Professor of Finance at the Owen School, found that many fund providers earn significant revenue through securities lending by ETFs and other passive investments, but the original investors see little or none of this profit.
Vanderbilt University