As the market has gotten a little frothy, business development companies have garnered the attention of those looking for action. The chart shows two ETNs based upon the Wells Fargo Business Development Company Index. BDCS tracks the index and BDCL is designed to double it. The S&P 500 is provided for comparison purposes.
Looking at BDCS versus the S&P, the latter outperformed during the sloppy first part of the period and matched BDCS overall, thanks to a bit of a slide in BDCS of late. I would have thought BDCS would have done better given the level of interest in it.
BDCL stands out because of its increase of over 50% in the three months from mid-November to mid-February. Unfortunately, there are still rankings of funds that will show BDCL as among the best around, rather than as “an OK sector that was levered two times.” Consequently there will be buyers chasing it who haven’t thought about the opposite pattern, which showed itself in the early days of the ETN.
If you’d like to get even less information than these opaque vehicles provide and pay even higher fees, there are non-traded cousins of them that some well-known firms (and their “advisors”) would be happy to sell you. Their odds of coming out ahead are better than yours.
There seems to be a limitless supply of junk out there to be sold. Call your mom and make sure she hasn’t had an appointment with an advisor that was more interested in his own business development than her security. (Chart: Bloomberg terminal.)
Financial Planning recently named ten influential blogs for advisors to read. A great list of writers (Rhoades, Roche, Brown, Seawright, Ritholtz, Pfau, Kitces, Winterberg, and Viskanta) and one puzzler (me).
It has a different look than it used to, but a new PDF guide is available if you want an overview of my writings. A good place to start to get your bearings before trying to solve “the research puzzle.”