BDC ETF as a Rebound Play

BDCs are also seen as sensitive to higher interest rates, but that situation may be overstated as well. Since the debt is typically senior secured and set to float with interest rate benchmarks, there is diminished rate risk. When the Fed raises rates, BDC loan interest rates pegged to the London Interbank Offered Rate, or LIBOR, will also rise.

Business development companies are required to disclose so-called acquired fund fees and expenses, which are a type of business expense and not considered “fees” in the way fund investors are familiar with. [Making Sense of Acquired Fund Fees in BDC ETFs]

“’It’s an out-of-favor sector with a lot of unloved companies and as a value guy that appeals to me.’ Abella is bullish on Prospect Capital (PSEC) which last traded at $7, a nearly 30% discount to its NAV of $9.65. The shares, which yield over 14%, are down over 20% in the past year, but have bounced back 30% since reporting better than expected net investment income a share earlier his month,” adds

Market Vectors BDC Income ETF