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Should You Invest in the VanEck Vectors BDC Income ETF (BIZD)?

Sweta Killa

Looking for broad exposure to the Financials - BDCs/PE segment of the equity market? You should consider the VanEck Vectors BDC Income ETF (BIZD), a passively managed exchange traded fund launched on 02/11/2013.

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Financials - BDCs/PE is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 11, placing it in bottom 31%.

Index Details

The fund is sponsored by Van Eck. It has amassed assets over $200.78 M, making it one of the average sized ETFs attempting to match the performance of the Financials - BDCs/PE segment of the equity market. BIZD seeks to match the performance of the MVIS US Business Development Companies Index before fees and expenses.

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The MVIS US Business Development Companies Index tracks the overall performance of publicly traded business development companies.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 9.41%, making it the most expensive product in the space.

It has a 12-month trailing dividend yield of 9.32%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Financials sector--about 100% of the portfolio.

Looking at individual holdings, Ares Capital Corp (ARCC) accounts for about 19.82% of total assets, followed by Fs Kkr Capital Corp (FSK) and Main Street Capital Corp (MAIN).

The top 10 holdings account for about 74.24% of total assets under management.

Performance and Risk

The ETF has added roughly 16.74% and was up about 13.19% so far this year and in the past one year (as of 03/05/2019), respectively. BIZD has traded between $14.04 and $17.40 during this last 52-week period.

The ETF has a beta of 0.87 and standard deviation of 10.78% for the trailing three-year period, making it a medium risk choice in the space. With about 25 holdings, it has more concentrated exposure than peers.

Alternatives

VanEck Vectors BDC Income ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, BIZD is a reasonable option for those seeking exposure to the Financials ETFs area of the market. Investors might also want to consider some other ETF options in the space.

VIRTS-PVT CR ST (VPC) tracks INDXX PRIVATE CREDIT INDEX and the Invesco Global Listed Private Equity ETF (PSP) tracks Red Rocks Global Listed Private Equity Index. VIRTS-PVT CR ST has $161.48 M in assets, Invesco Global Listed Private Equity ETF has $227.68 M. VPC has an expense ratio of 7.64% and PSP charges 2.03%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.


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VanEck Vectors BDC Income ETF (BIZD): ETF Research Reports
 
Invesco Global Listed Private Equity ETF (PSP): ETF Research Reports
 
Main Street Capital Corporation (MAIN) : Free Stock Analysis Report
 
Ares Capital Corporation (ARCC) : Free Stock Analysis Report
 
FS Investment Corporation (FSK) : Free Stock Analysis Report
 
VIRTS-PVT CR ST (VPC): ETF Research Reports
 
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Zacks Investment Research