VanEck Vectors BDC Income ETF: A Comprehensive Review

The VanEck Vectors BDC Income ETF is a popular investment option for those seeking regular income. It's designed to track the performance of the MVIS US Business Development Companies Index.

This ETF is a type of exchange-traded fund, meaning it's traded on a stock exchange like individual stocks. It's a convenient way to invest in a diversified portfolio of business development companies, or BDCs.

BDCs are unique investment vehicles that allow individuals to invest in private companies, providing a source of income through interest payments. The VanEck Vectors BDC Income ETF offers exposure to this niche market, providing access to a diversified portfolio of BDCs.

Investors can expect to receive regular income distributions from this ETF, making it an attractive option for those seeking a steady stream of income.

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The VanEck Vectors BDC Income ETF is an actively managed fund that provides investors with a unique way to tap into the potential of Business Development Companies (BDCs). It has a net expense ratio of 0.85%.

The fund has a total net assets of over $1.5 billion, making it a significant player in the market. It offers a dividend yield of around 8.5%, which is attractive to income-seeking investors.

The ETF's investment strategy is focused on providing a high level of income, with a target dividend yield of 8-10%. This is achieved by investing in a portfolio of BDCs that have a strong track record of paying dividends.

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Let's take a closer look at VanEck BDC Income ETF's top holdings. The fund's top holdings are dominated by a few key players.

Ares Capital Corporation holds the largest percentage of the fund's assets at 19.42%.

Blue Owl Capital Corporation comes in second with a 12.48% stake in the fund.

FS KKR Capital Corp. also has a significant presence, holding 12.40% of the fund's assets.

Main Street Capital Corporation rounds out the top five with a 4.76% stake.

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Hercules Capital, Inc. and Blackstone Secured Lending Fund also make the top holdings list with 4.71% and 4.64% respectively.

Golub Capital BDC, Inc. and Prospect Capital Corporation also hold notable positions in the fund with 4.28% and 3.69% respectively.

Sixth Street Specialty Lending, Inc. and Morgan Stanley Direct Lending Fund complete the top holdings list with 3.68% and 3.39% respectively.

Here are the top holdings in a concise table:

The composition of the VanEck BDC Income ETF - USD is a diverse mix of top-performing BDCs. Each of these companies plays a significant role in the overall performance of the ETF.

ARES Capital Corporation is the largest holding in the ETF, making up 21.57% of the fund's weight. It's worth noting that the price of ARES Capital Corporation has increased by 2.67% since the start of the year.

The ETF also holds FS KKR Capital Corp., which accounts for 9.08% of the fund's weight. Its price has increased by 1.44% since the start of the year.

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Other notable holdings in the ETF include Blackstone Secured Lending Fund, which accounts for 8.54% of the fund's weight, and Morgan Stanley Direct Lending Fund, which accounts for 3.08% of the fund's weight.

Here's a breakdown of the top holdings in the VanEck BDC Income ETF - USD:

These holdings contribute to the overall performance of the ETF, and their weights can give you an idea of their relative importance in the fund.

The VanEck BDC Income ETF has a relatively low portfolio turnover rate of 12%, which means it holds its assets for around 0.1 years.

This is significantly lower than the average portfolio turnover of 30% for the Financial category.

The ETF's low turnover rate suggests that it has a more stable and long-term investment approach, which can be beneficial for investors looking for consistent returns.

High portfolio turnover can lead to higher expenses and lower after-tax returns. The VanEck BDC Income ETF has a portfolio turnover rate of 12%, indicating it holds its assets for around 0.1 years.

The average portfolio turnover for the Financial category is 30%. This suggests that the VanEck BDC Income ETF has a relatively low turnover rate compared to its peers.

In January 2025, the VanEck BDC Income ETF returned 5.3%, which earned it a grade of D. This is because the Financial category had an average return of 5.3% that month.

A grade of A would indicate that the return is in the highest 20% for that time period compared to all ETFs in the category.

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Grades are a key way to measure how well a fund is performing compared to its peers. The VanEck BDC Income ETF has received a D grade year-to-date, meaning it's only slightly better than the category average.

To understand the grades, let's look at the fund's performance over different time periods. Over the past year, the fund has returned 19.8%, earning it an F grade. However, over the past three years, it's returned 11.3%, earning a B grade.

Here's a breakdown of the fund's grades over various time periods:

The fund's grades are based on its performance relative to its category, and a higher grade indicates better performance. The grades are a useful tool for investors to quickly understand how well a fund is performing compared to its peers.

A steeper yield curve can have a significant impact on BDCs, as it creates a net negative effect for these investment companies.

Higher long-term rates can be a challenge for BDCs, as they may struggle to maintain their interest income in a rising rate environment.

The steepening of the yield curve over the past couple of months has been positive for BDCs, but this trend may not last.

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Dividend investing is a strategy that focuses on generating income through dividend-paying stocks.

The VanEck Vectors BDC Income ETF offers a unique way to access the business development company (BDC) space, which has a history of paying consistent dividends.

Investors can benefit from the regular income generated by BDCs, with some companies paying out 90% or more of their taxable income as dividends.

By investing in a BDC-focused ETF like the VanEck Vectors BDC Income ETF, investors can potentially earn a higher income stream compared to traditional dividend-paying stocks.

Dividend stocks may look cheap, but are they actually value traps? The REIT, energy, and BDC sectors face major headwinds.

Some dividend stocks appear to be undervalued, but our research suggests they could be value traps. We need to be cautious when investing in these sectors.

The REIT sector is facing significant challenges, including rising interest rates and decreased demand for commercial properties. This has led to a decline in dividend payments.

Investors should be aware that the energy sector is also experiencing difficulties, including low oil prices and decreased demand. This has made it challenging for energy companies to maintain their dividend payments.

BDCs, or business development companies, are another sector that faces headwinds, including increased competition and decreased returns on investment.

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The current market offers a historic opportunity for dividend stocks. This is a great time to consider investing in dividend stocks, as the market conditions are favorable.

We're seeing a unique situation where dividend stocks are offering attractive yields, making them an appealing option for investors. The current market offers a historic opportunity for dividend stocks.

The article highlights some of the names that the authors are buying to take advantage of this opportunity. These names are carefully selected based on their dividend-paying history and potential for growth.

Investors should be aware that this historic opportunity may not last forever, so it's essential to act quickly and do your research.

Investors should consider key differences between BDC ETFs, such as BIZD and PBDC, before adding them to their income portfolios.

Both BIZD and PBDC offer investors the opportunity to add BDCs to their income portfolios through BDC ETFs.

Investors should look for the superior investment between PBDC and BIZD, as they have different characteristics that may suit different investment goals.

BDCs are a type of investment that can provide income for investors, and BDC ETFs offer a convenient way to access this investment type.

By considering the differences between BIZD and PBDC, investors can make a more informed decision about which BDC ETF to invest in.

The current market offers a historic opportunity for dividend stocks, with a 30-Day SEC Yield of 10.29% in BIZD, a competitive rate in the market.

BIZD has a positive 5+ year CAGR, a metric that shows the fund's long-term growth potential.

If you're looking to hedge against S&P 500 contractions, BIZD is an ETF worth considering. It has a 30-Day SEC Yield of 10.29%, making it a competitive option in the market.

BDCs have a proven track record of performing well during S&P 500 contractions.

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Some BDCs offer a significant discount to their net asset value (NAV), creating an opportunity for attractive price returns in addition to dividend income.

BDCs with a 20%+ discount to NAV can provide a unique investment opportunity.

PBDC and BIZD are two BDCs that offer investors this opportunity, but they have key differences to consider.

One BDC with a 20%+ discount to NAV that's worth considering is likely to be mentioned in articles that highlight top stocks to watch.

The primary return source of BDC investments is dividend income, but a mismatch between price and value can also provide attractive price returns.