Investors who don’t want to invest in BDC stocks individually can buy ETFs that track the whole BDC industry. Four BDC ETFs and ETNs are dedicated to the BDC industry, sporting high yields from a diversified portfolio of stocks.
The VanEck Vectors BDC Income ETF is the best BDC sector ETF because it holds stocks based on their market-cap weighting, so that larger BDCs are a larger part of the fund. This is how most ETFs operate.
UBS’s ETRACS ETNs track Wells Fargo’s BDC index of stock picks in the industry, with the best stocks (according to Wells’ analysts) getting a bigger share of the fund’s investment dollars. BDCS is a straightforward index tracker, whereas BDCL pays a higher yield by leveraging the returns of the Wells Fargo index. If the index is up 10%, then the BDCL index will be up about 20%.