BDCs Have Big Yields, But Consider These Important Factors March 17, 2021
The search for yield can take income investors to a wide range of alternative asset classes. Those include business development companies (BDCs), accessible via the VanEck
BIZD looks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS® US Business Development Companies Index. The fund normally invests at least 80% of its total assets in securities that comprise the fund’s benchmark index.
The index is comprised of BDCs. BDCs are vehicles whose principal business is to invest in, lend capital to, or provide services to privately-held companies or thinly traded U.S. public companies. Getting financing nowadays can be tough through traditional means like big banks. BDCs help fill the gap. While the income proposition is alluring, investors have other considerations with BDCs.
February 19, 2021
In the current low rate environment, fixed income investors don’t have time for any monkey business. When it comes to seeking income sources, one promising place to look is business development companies (BDCs) via the
BIZD gets down to business by seeking to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS® US Business Development Companies Index. The fund normally invests at least 80% of its total assets in securities that comprise the fund’s benchmark index.
The index is comprised of BDCs. BDCs are vehicles whose principal business is to invest in, lend capital to, or provide services to privately-held companies or thinly traded U.S. public companies. Getting financing nowadays can be tough through traditional means like big banks. BDCs help fill the gap.
BIZD gets down to business by seeking to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS® US Business Development Companies Index. The fund normally invests at least 80% of its total assets in securities that comprise the fund’s benchmark index.
BDCs offer attractive income opportunities since they are required to pay out 90% of income in form of dividends, a structure similar to what income investors find with real estate investment trusts (REITs).
“Business Development Companies (BDCs) are one alternative income source investors may consider when looking to enhance yield in their portfolio,” writes VanEck analyst Coulter Regal. “BDCs issue common stock and generate income by lending to, and investing in, private companies that tend to be rated below investment grade or unrated and are generally difficult to access. This private credit nature of BDCs, paired with their pass through tax treatment, has historically p