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

Zacks Equity Research
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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.

Additionally, sector ETFs offer convenient 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 9, placing it in bottom 44%.

Index Details

The fund is sponsored by Van Eck. It has amassed assets over $205.05 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.

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 0.40%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 9.39%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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 19.96% of total assets, followed by Main Street Capital Corp (MAIN) and Prospect Capital Corp (PSEC).

The top 10 holdings account for about 69.98% of total assets under management.

Performance and Risk

The ETF has gained about 5.97% and is up roughly 2.19% so far this year and in the past one year (as of 10/05/2018), respectively. BIZD has traded between $15.74 and $17.54 during this last 52-week period.

The ETF has a beta of 0.70 and standard deviation of 11.60% for the trailing three-year period, making it a medium risk choice in the space. With about 26 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 good 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.

Invesco Raymond James SB-1 Equity ETF (RYJ) tracks Raymond James SB-1 Equity Index and the Invesco Global Listed Private Equity ETF (PSP) tracks Red Rocks Global Listed Private Equity Index. Invesco Raymond James SB-1 Equity ETF has $191.91 M in assets, Invesco Global Listed Private Equity ETF has $265.38 M. RYJ has an expense ratio of 0.75% and PSP charges 0.50%.

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-BDC INC (BIZD): ETF Research Reports
 
Prospect Capital Corporation (PSEC) : Free Stock Analysis Report
 
PWRSH-GLBL LIST (PSP): ETF Research Reports
 
Main Street Capital Corporation (MAIN) : Free Stock Analysis Report
 
Ares Capital Corporation (ARCC) : Free Stock Analysis Report
 
GUGG-RJ SB-1 EQ (RYJ): ETF Research Reports
 
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