The contrarian investor - Are ETFs working?

Let us start with the subject of lending out shares in an ETF. It makes the managers extra money, which they use to cut costs, but in times of crisis the practice could blow up in our faces. If a major issuer of a mainstream FTSE 100 lent out a large chunk of their portfolio of blue chips to a sole external outfit like an hedge fund and that hedge fund froze up, guess what could happen to your ETF? It would implode. Those shares lent out are the firm's net asset value, yet the administrators of a defaulting counterparty might not give two hoots about your claim on your assets. This prom...