“Willingness to represent the small cap reality—and the BDCs are a major/growing part of the small cap market,” according to Wells. “Russell Indices receive acclaim because they are willing to provide investors access to the true investable small cap universe. To the extent BDCs are excluded, this would deprive investors the opportunity to invest in what has become a very large/growing industry.”

BDCs are high-dividend-paying firms that focus on lending senior secured loans to midsized companies. These companies act like banks to other companies, but the BDCs are not structured as banks since they pay out at least 90% of income to investors through dividends. BDC-related ETFs are good sources of high dividend yields. BIZD has a 5.43% 12-month yield, BDCS has a 7.08% yield and BDCL has a 14.71% yield. [Generate Yields with BDC ETFs]

Market Vectors BDC Income ETF

For more information on BDCs, visit our business development companies category.

Max Chen contributed to this article.