They all returned from him to you

Alice hears the evidence

Alice hears the evidence

`They told me you had been to her,
And mentioned me to him:
She gave me a good character,
But said I could not swim.

I gave her one, they gave him two,
You gave us three or more;
They all returned from him to you,
Though they were mine before.’

These verses from Lewis Carroll’s Alice in Wonderland are usually thought to be meaningless (Alice didn’t believe there was an atom of meaning in it), but they might not be a bad representation of fund management’s stock lending programmes.

RImetrics, which rates asset managers on their responsible investment policies, mentions in its most recent annual report “In the assessed group, 32 per cent of managers operated stock lending programmes and a quarter of these suggested that they did not disclose the returns gained from these activities to their clients”.

For a throwaway line, this is pretty big stuff surely? If I ask you to look after my widget and you then hire it out, surely you have at least a responsibility to let me know what you’re earning from my widget, if not to split the gains?

Even if the returns from stock lending are used to hold down management fees, surely this should be made clear to the investor? Does the fiduciary relationship not demand this much transparency? These asset managers are risking their “good character” whether or not they can swim.

About the blog

FTfm is no longer updated but it remains open as an archive.

FTfm's specialist writing team offer their insights into the global fund management industry.

About the authors

Pauline Skypala has been editor of FTfm for four years having previously been deputy personal finance editor. She joined the FT in 1999 and has been writing on savings and investment issues throughout her career.

Steve Johnson, FTfm deputy editor, has been a journalist for 17 years, 10 of which have been with the FT.


Sophia Grene, reporter on FTfm, has been a financial journalist in print and online for 12 years.

Ruth Sullivan has worked as a financial/business journalist and foreign correspondent and for the past 10 years has been at the FT.

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