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

Zacks Equity Research
·3 min read

Designed to provide broad exposure to the Financials - BDCs/PE segment of the equity market, the VanEck Vectors BDC Income ETF (BIZD) is a passively managed exchange traded fund launched on 02/11/2013.

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

Investor-friendly, sector ETFs provide many options 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 4, placing it in top 25%.

Index Details

The fund is sponsored by Van Eck. It has amassed assets over $211.49 million, 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.

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

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 10.24%, making it the most expensive product in the space.

It has a 12-month trailing dividend yield of 12.11%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that 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 12.59% of total assets, followed by Owl Rock Capital Corp (ORCC) and Fs Kkr Capital Corp Ii (FSKR).

The top 10 holdings account for about 58.07% of total assets under management.

Performance and Risk

The ETF has lost about -21.07% and is down about -17.90% so far this year and in the past one year (as of 11/08/2020), respectively. BIZD has traded between $7.64 and $17.26 during this last 52-week period.

The ETF has a beta of 1.32 and standard deviation of 31.30% for the trailing three-year period, making it a medium risk choice in the space. With about 28 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 sufficient 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.

Virtus Private Credit Strategy ETF (VPC) tracks INDXX PRIVATE CREDIT INDEX and the Invesco Global Listed Private Equity ETF (PSP) tracks Red Rocks Global Listed Private Equity Index. Virtus Private Credit Strategy ETF has $20.08 million in assets, Invesco Global Listed Private Equity ETF has $164.33 million. VPC has an expense ratio of 8.32% and PSP charges 1.78%.

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
 
Ares Capital Corporation (ARCC) : Free Stock Analysis Report
 
Owl Rock Capital Corporation (ORCC) : Free Stock Analysis Report
 
Invesco Global Listed Private Equity ETF (PSP): ETF Research Reports
 
Virtus Private Credit Strategy ETF (VPC): ETF Research Reports
 
FS KKR Capital Corp. II (FSKR) : Free Stock Analysis Report
 
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Zacks Investment Research