CGVV: Borrowing Costs Spike as Short Interest Triples Since March

CGVV, the Capital Group U.S. Large Value ETF, has developed a surprisingly active borrow market for a passively-oriented large-cap fund — with the cost to short the ETF now running at levels more commonly associated with distressed single names.

The most striking feature of the current setup is the cost to borrow, which has tripled from around 16% in early March to 58% today. That is an unusually steep rate for an ETF of this type. The move did not happen in a straight line: CTB briefly peaked near 88% at the end of April before pulling back, and it has been volatile throughout May, ranging from 56% to 83% over the past two weeks alone. At current levels, carrying a short position in CGVV is expensive by any standard.

Short positions have also grown materially, though the absolute level remains modest. Shares short have nearly tripled since mid-March — from around 5,800 to 17,814 — lifting SI as a percentage of the float from roughly 0.13% to 0.41%. Those are still small numbers in absolute terms, and by themselves would not normally warrant close attention. What makes the picture unusual is the combination: a very small pool of shorts, a very high borrow rate, and a lending market that has been oscillating between tight and near-exhausted. Availability has been particularly erratic, touching 0% (fully loaned out) on several days in April before recovering to a more normal range. The ORTEX short score is holding steady near 60 — a moderate but not extreme reading, broadly consistent with the activity observed.

The fund itself has performed well. CGVV closed at $30.18 on May 12, up about 7.2% over the past month and 0.7% on the week. That price recovery likely reflects the broader rotation into value names that has characterised the market since early April. As a large-cap value ETF, CGVV would naturally benefit from that environment. The modest short position may in part reflect a hedging trade against concentrated value exposure elsewhere in a portfolio, rather than a directional bet against the fund.

There is no analyst coverage, no earnings calendar, and no valuation data to parse for an ETF of this nature. The story here is entirely in the borrow mechanics. What to watch is whether the cost to borrow stabilises or continues its recent descent from the April highs — and whether the short base holds near current levels or begins to unwind as value outperformance makes the hedge more costly to maintain.