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.