Van Eck's Market Vectors unit, the fifth-largest U.S. ETF
issuer, today introduced the Market Vectors BDC Income ETF (
), a fund the firm says is the first designed to offer pure-play
exposure to high-yielding business development companies.
With an annual expense ratio 0.4 percent, BIZD tracks the
Market Vectors US Business Development Companies Index
(MVBIZDTG), a rules-based index that tracks the performance of
publicly traded business development firms.
"To be eligible for the index, a BDC must also have a market
capitalization in excess of $150 million, a three-month average
daily trading volume of at least $1 million, and a minimum
trading volume of 250,000 shares each month in the previous six
months," according to a statement issued by Market Vectors.
Acquired fund fees and other expenses work out to 7.16 percent
on an annual basis, but investors will not absorb those costs.
Rather, those costs will be seen in the prices of the new ETF's
BIDZ comes to market at a time when investors' thirst for
dividends and robust yields remain high. With an average weighted
dividend yield of 7.6 percent, BIDZ appears to be an ETF to
consider for the income-minded investor, but not one that is
"Market Vectors notes that an investment of this kind is not
without risks. BDCs invest in private companies and thinly traded
securities of public companies, including the debt instruments of
such companies, making them potentially susceptible to issues
arising out of bankruptcies or defaults. Additionally,
limitations on asset mix and leverage may make it difficult for
BDCs to raise capital and BDCs may be more adversely affected by
market volatility than more diversified investments," said Market
Vectors in the statement.
About half of the holdings in BIDZ have market values ranging
from $1 billion to $5 billion while the other half are valued at
less than $1 billion. Ares Capital (NASDAQ:
) is the new ETF's largest holding with a weight of almost 16
percent while American Capital (NASDAQ:
) is next at 14.8 percent.
Other top-10 holdings include Prospect Capital (NASDAQ:
), Apollo Investment (NASDAQ:
), Fifth Street Finance (NASDAQ:
) and Solar Capital (NASDAQ:
). Overall, the top-10 holdings in BIDZ account for just over 72
percent of the ETF's weight.
"Business development companies have traditionally been
high-yielding, making them an attractive choice in today's
ongoing search for income," said Brandon Rakszawski, product
manager for Market Vectors
, in the statement. "Investing in BDCs provides exposure to
private companies that many investors could not otherwise access,
allowing for potential growth and yield generation."
For more on ETFs, click
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
Gain access to more investing ideas, tools & education.
Get Started on Marketfy, the first ever curated
& verified Marketplace for everything trading.