Market Vectors ETF Trust has rolled out the first BDC Income exchange-traded fund (ETF), designed to offer pure-play exposure to traditionally high-yielding business development companies (BDC).
Market Vectors ETFs product manager Brandon Rakszawski said, "Investing in BDCs provides exposure to private companies that many investors could not otherwise access, allowing for potential growth and yield generation."
BDCs’ main business is to offer capital lending or provide services to privately-held companies or thinly-traded US public companies.
The fund seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Market Vectors US Business Development Companies Index (MVBIZDTG).
In order to be qualifying for the index, a BDC must have a market capitalization over $150m, a three-month average daily trading volume of at least $1m, and a minimum trading volume of 250,000 shares each month during last six months.
BDCs invest in private companies and sparsely traded securities of public companies, including the debt instruments of such companies, making them potentially susceptible to issues arising out of bankruptcies or defaults.
Established in 1955, the Market Vectors family had total $27.6bn in assets under management as of 31 December 2012.