High-Yield BDC Sector Continues To Outperform The S&P 500 In 2019

As predicted in previous articles, business development companies ("BDC") continue to outperform the overall markets in 2019 with an average total return of around 22%. However, there is a wide range of results, and I will briefly discuss some of the reasons why as well as compare to the returns for many of the Baby Bonds that were discussed last week.

Overperformers
TPVG, GLAD, GAIN, FDUS, MAIN, HTGC, OCSL, and ARCC have all been among the top performers for net asset value ("NAV") per share performance recently. OTC:AINV, CGBD, and SUNS have had recent declines in NAV but were relative oversold going into 2019.
Underperformers
I do not actively cover many of these BDCs including MCC, BKCC, OXSQ, HCAP, SCM, HRZN, GECC, and SLRC, but many of them had increased credit issues reported in 2019. SLRC and SCM are some of the exceptions and not sure why they have been underperforming.
PNNT and PFLT are not doing as well as for the reasons discussed in "Recent And Upcoming Credit Issues For PennantPark". Also, TCPC has had some legacy credit issues discussed in "Digging Into The Credit Profile For 10.7% Yielding BlackRock TCP Capital". Please see my recent PSEC articles that discussed many credit issues that will likely get worse in the second half of the year.
BDC Baby Bond & Preferred Share Returns
As mentioned in "Balancing Your Portfolio With BDC Baby Bonds," I have been making select purchases of safer BDC baby bonds and preferred shares as I... Read more