Recently announced, Wilshire Associates Incorporated (Wilshire®) launched a Business Development Company (BDC) index to allow monitoring of this growing asset class that provides average investors access to private debt of small and middle market companies.
The index, named The Wilshire BDC Index, will measure the performance of liquid, debt-focused BDCs.
This is an important milestone for the BDC industry as a whole.
Since 2009, thanks to Franklin Square Capital Partners, the self-proclaimed pioneer of the non-traded BDC, the investment offering has grown in popularity.
There are 12 companies that either have available or filed to launch a non-traded BDC, according to The DI Wire’s latest research.
In most cases, these sponsors primarily have focused on another asset class, namely real estate. Rather than hire staff with private equity investing prowess, these companies have engaged sub-advisors such as Blackstone / GSO (Franklin Square), Apollo (ICON’s CION), and Och Ziff (NorthStar).
BDCs provide average investors access to investment opportunities in small and mid-sized companies just like private equity and venture capital funds do for institutional investors.
Wilshire’s index tracks the debt focused variety, however, many BDCs also invest in equity or a combination of both. Of course the index only tracks publicly traded business development companies, but its existence signifies the importance and growth of the investment structure, whether traded or not.
According to Robert J. Waid, managing director of Wilshire Analytics, as of December 2013, the market value of BDCs was about $30 billion.
“We are thrilled to introduce an index that tracks this specific component of the BDC market, which has often delivered yields several hundred basis points higher than REITs (real estate investment trusts), utilities and MLPs (master limited partnerships),” commented Waid in a statement.