BDCs Emerge as a High-Yield Haven as Private Credit Shifts
November 26, 2025
Read Time 4 MIN
Key Takeaways:
- Investors facing losses in individual BDC holdings may use tax loss harvesting to reset cost basis without stepping away from high yield private credit exposure.
- BDCs continue to outyield many traditional income categories, supported by lending to smaller private companies at higher interest rates.
- Despite short term volatility, private credit remains supported by strong demand and disciplined underwriting, keeping long term income potential in focus.
As investors search for income beyond traditional bonds, private credit has emerged as a resilient alternative. Business Development Companies (BDCs) provide access to this growing market, offering yields that often exceed those of conventional income sources. VanEck’s BDC Income ETF (BIZD) offers a diversified, liquid way to invest across the BDC universe, helping investors stay positioned for income opportunities as market conditions evolve.
High Yield Potential in a Diversified Package
One of the most compelling reasons investors turn to BIZD is its consistent high yield potential relative to other income-oriented investments. Many BDCs generate substantial income that often exceeds yields available in other income oriented assets such as investment grade bonds, high yield bonds, utilities, or dividend paying stocks.
BIZD provides a single ticker with diversified exposure to this high income segment of private credit, while reducing the company specific risks of holding a single BDC.
Yield Comparison Across Income Opportunities
Source: FactSet and ICE Data Indices as of 10/31/2025. Past performance is no guarantee of future results. Yield for BDCs, Equity REITs, Utilities Stocks, and U.S. Stocks represented by dividend yield. Yield for U.S. HY Bonds, U.S. IG Bonds, and 10 Yr Treasury represented by yield-to-worst. BDCs represented by MVIS US Business Development Companies Index; U.S. HY Bonds represented by ICE BofA US High Yield Index; U.S. IG Bonds represented by ICE BofA U.S. Corporate Index; Equity REITs represented by FTSE NAREIT All Equity REITs Index; Utilities Stocks represented by S&P Utilities Index; U.S. Stocks represented by S&P 500 Index; U.S. 10 Yr Treasury represented by ICE BofA Current 10-Year US Treasury Index.
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The Broader Case for Private Credit and BDCs
Private credit has gained significant traction as investors seek yield and diversification away from traditional bonds. BDCs, which provide financing to small and mid-sized U.S. businesses, play a crucial role in this growing ecosystem. While BDCs and other private credit vehicles have historically benefited from floating-rate structures during periods of rising interest rates, these same floating-rate exposures can also serve as a valuable diversifier alongside traditional fixed-rate bond holdings as the rate environment evolves going forward.
Despite short-term fluctuations, the long-term fundamentals of private credit remain strong, driven by growing demand for alternative financing and disciplined underwriting across many BDCs. Additionally, the structural shift in capital markets underscores how private credit continues to gain share from traditional high yield.
Private Credit Continues to Take Share From High Yield Bonds
Source: Man Group, Private Credit: Dispelling the Myths; PitchBook, as of June 2024.
Turning Market Pullbacks into Opportunity
Market pullbacks can be unsettling, but they often create opportunities, especially for investors using tax-loss harvesting as part of their year-end or ongoing portfolio strategy. As private credit continues to expand as an asset class, business development companies (BDCs) have emerged as a unique, income generating way to access this market.
Recent volatility in BDCs has pushed prices lower, and the BDC industry, in aggregate, now trades below its long-term average price-to-book ratio for the first time in several years. For some investors, that means unrealized losses in individual BDC holdings. Rather than viewing these losses as setbacks, investors can potentially turn them into a tax advantage, and stay invested in the sector’s long-term growth story by reallocating to a diversified, high-yield vehicle like BIZD.
BDCs Now Trade Below Their Long-Term Average Valuation
Source: FactSet as of 11/19/2025. BDCs represented by MVIS US Business Development Companies Index; A weighted harmonic average is used to calculate Price-to-book; Index data prior to June 19, 2023 reflects that of MarketVector US Business Development Companies Liquid Index (MVBIZDTG). From June 19, 2023 forward, the index data reflects that of the MVIS US Business Development Companies Index (MVBDCTRG). Index history which includes periods prior to June 19, 2023 links the performance of MVBIZDTG and MVBDCTRG and is not intended for third party use. Past performance is no guarantee of future results. See important disclosures and index descriptions at end.
BIZD | VanEck BDC Income ETF
The Benefits of a Diversified BDC Investment Approach
VanEck’s BDC Income ETF (BIZD) provides broad exposure to publicly traded BDCs through a single liquid ticker. This helps solve several structural challenges of investing directly in individual private credit vehicles.
Key potential benefits of using BIZD for BDC exposure:
- Diversified exposure across many BDCs rather than single name concentration
- High income potential relative to traditional fixed income categories
- Daily liquidity and transparency
- Ease of access through the ETF wrapper
- Potential ability to remain invested in private credit while harvesting tax losses elsewhere
For investors who want to stay in the income producing private credit space but reduce single company risk or reset tax basis, BIZD may provide an efficient solution.
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IMPORTANT DISCLOSURES
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
An investor cannot invest directly in an index. Returns reflect past performance and do not guarantee future results. Results reflect the reinvestment of dividends and capital gains, if any. Certain indices may take into account withholding taxes. Index returns do not represent Fund returns. The Index does not charge management fees or brokerage expenses, nor does the Index lend securities, and no revenues from securities lending were added to the performance shown.
Business Development Companies (BDCs) generally invest in less mature U.S. private companies or thinly traded U.S. public companies which involve greater risk than well-established publicly-traded companies. While the BDCs that comprise the Index are expected to generate income in the form of dividends, certain BDCs during certain periods of time may not generate such income. The Fund will indirectly bear its proportionate share of any management fees and other operating expenses incurred by the BDCs and of any performance-based or incentive fees payable by the BDCs in which it invests, in addition to the expenses paid by the Fund. A BDC’s incentive fee may be very high, vary from year to year and be payable even if the value of the BDC’s portfolio declines in a given time period. Incentive fees may create an incentive for a BDC’s manager to make investments that are risky or more speculative than would be the case in the absence of such compensation arrangements, and may also encourage the BDC’s manager to use leverage to increase the return on the BDC’s investments. The use of leverage by BDCs magnifies gains and losses on amounts invested and increases the risks associated with investing in BDCs. A BDC may make investments with a larger amount of risk of volatility and loss of principal than other investment options and may also be highly speculative and aggressive. The Fund and its affiliates may not own in excess of 25% of a BDC’s outstanding voting securities which may limit the Fund’s ability to fully replicate its index. An investment in the Fund may be subject to risks which include, among others, investing in BDCs, investment restrictions, financial sector, small- and medium-capitalization companies, equity securities, market, operational, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount and liquidity of fund shares, issuer-specific changes, and index-related concentration risks, all of which may adversely affect the fund. Small- and medium-capitalization companies may be subject to elevated risks.
MVIS® US Business Development Companies Index (MVBDCTRG) tracks the overall performance of publicly traded business development companies.
ICE BofA US High Yield Index tracks the performance of U.S. dollar denominated below investment grade corporate debt securities issued in the U.S. domestic market.
ICE BofA U.S. Corporate Index tracks the performance of U.S. dollar denominated investment grade corporate bonds issued in the U.S. domestic market.
FTSE NAREIT All Equity REITs Index tracks the performance of U.S. equity real estate investment trusts. The index includes REITs that own and operate income producing real estate.
S&P Utilities Index measures the performance of U.S. companies included in the S&P 500 that are classified in the utilities sector.
S&P 500 Index is a float adjusted, market capitalization weighted index of 500 leading U.S. companies that is designed to measure the performance of the large cap U.S. equity market.
ICE BofA Current 10 Year US Treasury Index tracks the performance of the most recently issued 10 year U.S. Treasury note.
MVIS US Business Development Companies Index is the exclusive property of MarketVector Indexes GmbH (a wholly owned subsidiary of Van Eck Securities Corporation), which has contracted with Solactive AG to maintain and calculate the Index. Solactive AG uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards MarketVector Indexes GmbH, Solactive AG has no obligation to point out errors in the Index to third parties. The VanEck BDC Income ETF is not sponsored, endorsed, sold or promoted by MarketVector Indexes GmbH and MarketVector Indexes GmbH makes no representation regarding the advisability of investing in the Fund.
The Cliffwater Direct Lending Index (CDLI) seeks to measure the unlevered, gross of fee performance of U.S. middle market corporate loans, as represented by the asset-weighted performance of the underlying assets of Business Development Companies (BDCs), including both exchange-traded and unlisted BDCs, subject to certain eligibility requirements.
Investing involves substantial risk and high volatility, including possible loss of principal. Bonds and bond funds will decrease in value as interest rates rise. An investor should consider the investment objective, risks, charges and expenses of the Fund carefully before investing. To obtain a prospectus and summary prospectus, which contains this and other information, call 800.826.2333 or visit vaneck.com/etfs. Please read the prospectus and summary prospectus carefully before investing.
© Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.
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IMPORTANT DISCLOSURES
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
An investor cannot invest directly in an index. Returns reflect past performance and do not guarantee future results. Results reflect the reinvestment of dividends and capital gains, if any. Certain indices may take into account withholding taxes. Index returns do not represent Fund returns. The Index does not charge management fees or brokerage expenses, nor does the Index lend securities, and no revenues from securities lending were added to the performance shown.
Business Development Companies (BDCs) generally invest in less mature U.S. private companies or thinly traded U.S. public companies which involve greater risk than well-established publicly-traded companies. While the BDCs that comprise the Index are expected to generate income in the form of dividends, certain BDCs during certain periods of time may not generate such income. The Fund will indirectly bear its proportionate share of any management fees and other operating expenses incurred by the BDCs and of any performance-based or incentive fees payable by the BDCs in which it invests, in addition to the expenses paid by the Fund. A BDC’s incentive fee may be very high, vary from year to year and be payable even if the value of the BDC’s portfolio declines in a given time period. Incentive fees may create an incentive for a BDC’s manager to make investments that are risky or more speculative than would be the case in the absence of such compensation arrangements, and may also encourage the BDC’s manager to use leverage to increase the return on the BDC’s investments. The use of leverage by BDCs magnifies gains and losses on amounts invested and increases the risks associated with investing in BDCs. A BDC may make investments with a larger amount of risk of volatility and loss of principal than other investment options and may also be highly speculative and aggressive. The Fund and its affiliates may not own in excess of 25% of a BDC’s outstanding voting securities which may limit the Fund’s ability to fully replicate its index. An investment in the Fund may be subject to risks which include, among others, investing in BDCs, investment restrictions, financial sector, small- and medium-capitalization companies, equity securities, market, operational, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount and liquidity of fund shares, issuer-specific changes, and index-related concentration risks, all of which may adversely affect the fund. Small- and medium-capitalization companies may be subject to elevated risks.
MVIS® US Business Development Companies Index (MVBDCTRG) tracks the overall performance of publicly traded business development companies.
ICE BofA US High Yield Index tracks the performance of U.S. dollar denominated below investment grade corporate debt securities issued in the U.S. domestic market.
ICE BofA U.S. Corporate Index tracks the performance of U.S. dollar denominated investment grade corporate bonds issued in the U.S. domestic market.
FTSE NAREIT All Equity REITs Index tracks the performance of U.S. equity real estate investment trusts. The index includes REITs that own and operate income producing real estate.
S&P Utilities Index measures the performance of U.S. companies included in the S&P 500 that are classified in the utilities sector.
S&P 500 Index is a float adjusted, market capitalization weighted index of 500 leading U.S. companies that is designed to measure the performance of the large cap U.S. equity market.
ICE BofA Current 10 Year US Treasury Index tracks the performance of the most recently issued 10 year U.S. Treasury note.
MVIS US Business Development Companies Index is the exclusive property of MarketVector Indexes GmbH (a wholly owned subsidiary of Van Eck Securities Corporation), which has contracted with Solactive AG to maintain and calculate the Index. Solactive AG uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards MarketVector Indexes GmbH, Solactive AG has no obligation to point out errors in the Index to third parties. The VanEck BDC Income ETF is not sponsored, endorsed, sold or promoted by MarketVector Indexes GmbH and MarketVector Indexes GmbH makes no representation regarding the advisability of investing in the Fund.
The Cliffwater Direct Lending Index (CDLI) seeks to measure the unlevered, gross of fee performance of U.S. middle market corporate loans, as represented by the asset-weighted performance of the underlying assets of Business Development Companies (BDCs), including both exchange-traded and unlisted BDCs, subject to certain eligibility requirements.
Investing involves substantial risk and high volatility, including possible loss of principal. Bonds and bond funds will decrease in value as interest rates rise. An investor should consider the investment objective, risks, charges and expenses of the Fund carefully before investing. To obtain a prospectus and summary prospectus, which contains this and other information, call 800.826.2333 or visit vaneck.com/etfs. Please read the prospectus and summary prospectus carefully before investing.
© Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.