I own Cathy Wood’s ARKK in both an IRA and a brokerage account. Fidelity is asking to borrow my shares for 5.625% interest. Presumably they are loaned to short sellers. They are backed up with a promissory note. The main risk is a short sellers panic that might leave the borrower insolvent and unable to return shares. Promissory note is supposed to cover this situation.
Dividends are paid in cash with a 26.98% premium to compensate taxation as interest rather than qualified dividends.
This looks like a nice source of additional funds. Any experience out there with these?