BDC ETFs and Funds

A basket of lenders in one ticker, and the strange fee figure that comes with it.

7 minute read Intermediate Updated October 6, 2026

What you’ll learn

How BDC ETFs such as BIZD and PBDC work
Why their stated expense ratios look shockingly high
Why BDCs were dropped from major stock indexes
When a BDC fund makes more sense than picking a few BDCs

If BDCs appeal to you but picking among them feels like a lot of credit analysis, a BDC ETF holds a basket of them in one ticker. The catch is a strange fee figure that scares many people off, and that’s worth understanding properly.

The main funds

Fund	Approach	Worth knowing
BIZD	Index of the largest listed BDCs, weighted by size	The biggest and oldest BDC ETF
PBDC	Actively managed portfolio of BDCs	Managers pick and weight holdings themselves

BDC ETFs and two large BDCs, live Live data

Yield is the forward (indicated) yield, or trailing twelve months when no forward figure exists. Total return assumes dividends are reinvested. Updated after each trading day; past returns don't predict future ones.
Ticker	Name	Yield	Pays	1Y total return	5Y total return
BIZD	VanEck BDC Income ETF	14.27%	Quarterly	-4.0%	+24.5%
PBDC	Putnam BDC Income ETF	10.49%	Quarterly	-6.3%	n/a
ARCC	Ares Capital Corporation	10.20%	Quarterly	+3.2%	+46.2%
MAIN	Main Street Capital Corporation	6.55%	Monthly	-5.7%	+95.7%

The fee that looks like a mistake

Look up BIZD and you’ll see a total expense ratio somewhere above 10%. That looks outrageous. It isn’t what it seems.

US rules require any fund that owns other funds to report acquired fund fees and expenses (AFFE): the costs of the funds it holds. BDCs count as funds for this purpose, so a BDC ETF must add all the operating costs of its BDCs, including the interest they pay on their borrowing, to its own fee.

What a BDC ETF's expense figure contains

The ETF's own management feearound 0.4% to 0.8%

The BDCs' own management fees, incentive fees, interest and other costsaround 10% or more of assets

Total reported expense ratiooften 10% to 13%

Those underlying costs aren't an extra charge. They're the same costs you'd bear owning the BDCs directly, and they're already reflected in each BDC's dividend and share price. The ETF's own fee is the only additional cost.

The rule has real consequences. Because of it, the major index providers removed BDCs from their stock indexes in 2014, which meant index funds stopped buying them. There have been repeated efforts to change how BDC costs are reported. Until that happens, look at the ETF’s management fee and its total return, not the headline expense figure.

Fund or individual BDCs?

A BDC ETF makes sense if	Individual BDCs make sense if
You want BDC income without analyzing loan books	You're willing to read quarterly reports and track NAV
You want to spread credit risk widely	You want to favor the best managed BDCs and avoid the weakest
You value one simple holding	You want to avoid paying any extra fund fee

A size weighted fund owns the weak BDCs along with the strong ones. Over long periods, the gap between the best and worst BDCs has been large, which is why many income investors prefer to own a handful of well run ones directly.

Check your understanding

4 questions

Why does a BDC ETF's total expense ratio often appear to be over 10%?
If you bought the same BDCs directly instead of through the ETF, would you avoid those underlying BDC costs?
What's the main reason to use a BDC ETF rather than one or two BDCs?
What did major index providers do with BDCs in 2014?

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This lesson is for education only and isn’t financial, investment or tax advice. Tickers are used as examples of how things work, not as recommendations. Figures marked as live come from Dividend Duel’s market data and change daily. See our disclosure.