Eyes on Russell after BDCs tossed out of S&P indices


WIth business development companies getting the boot from S&P indices, will the Russell follow suit? It's a significant issue as investors are far more heavily invested in BDCs though the Russell indices than through S&P, writes Brendan Conway. He notes ownership of BDCs by Russell-tracking index funds are as high as 38 days worth of trading volume, and Wells Fargo estimates there are 24 BDCs where 10 or more days of average volume would be required to unload them.

Wells, however, does not see Russell following S&P's lead, with item #1 being Russell's desire to "represent small cap reality." "Russell Indices receive acclaim because they are willing to provide investors access to the true investable small cap universe. To the extent BDCs are excluded, this would deprive investors the opportunity to invest in what has become a very large/growing industry."

The following list is those BDCs with 10 or more days of average volume in index funds tracking Russell indices.

NGPC 38.23 days of volume, CSWC 29 days, SCM 23.5, FDUS 20.7, GARS 20, MVC 19.7, SUNS 18, WHF 17.8, SLRC 17.2, CPTA 16, MCGC 15.1, BKCC 14.9, TCRD 14, HRZN 14, TCAP 13.9, PNNT 13.3, HTGC 12.6, TICC 12.6, GLAD, 12.4, GBDC 12.3, KCAP 12.2, TAXI 11.8, MAIN 11.4, NMFC 9.98.

Related ETFs: BDCL, BDCS, BIZD

Other major names - no doubt  included in the indices, but whose holdings are less than 10 days of average trading volume: PSEC, FSC, ARCC, AINV, MCC, HTGC, TCPC, FULL, GBDC

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Comments (14)
  • moose60061
    , contributor
    Comments (247) | Send Message
     
    who is Brendon Conway?
    26 Feb 2014, 03:41 PM Reply Like
  • Davephd
    , contributor
    Comments (1123) | Send Message
     
    Here you go: http://on.barrons.com/...
    26 Feb 2014, 03:55 PM Reply Like
  • moose60061
    , contributor
    Comments (247) | Send Message
     
    Dave, thanks for link.
    Moose
    27 Feb 2014, 08:31 AM Reply Like
  • tikigod18
    , contributor
    Comments (1326) | Send Message
     
    Well, for long term investors, any further drop will create a buying opportunity, since the good ones are well managed and profitable businesses.
    26 Feb 2014, 04:54 PM Reply Like
  • davidbdc
    , contributor
    Comments (3194) | Send Message
     
    Let them drop them - let BCD's continue in obscurity - price drops enough I'll buy more and live better from the dividends.
    26 Feb 2014, 08:15 PM Reply Like
  • toglev
    , contributor
    Comments (27) | Send Message
     
    I'll take some more FSC long thank you!
    26 Feb 2014, 08:51 PM Reply Like
  • stock_research59
    , contributor
    Comments (8) | Send Message
     
    Most BDCs will had a slow decline, so its best to wait until there's a bottom.
    26 Feb 2014, 09:08 PM Reply Like
  • moose60061
    , contributor
    Comments (247) | Send Message
     
    Thing is, AINV has 16.2 million shares to be sold and PSEC has 17.7 million................I agree the drop is an opportunity but selling pressure is sure to continue at least over the next week, perhaps 2 weeks.
    27 Feb 2014, 08:36 AM Reply Like
  • speculative
    , contributor
    Comments (1625) | Send Message
     
    The lower the better. I couldn't resist and added more AINV at $8.54 and got some PSEC @$11.07 qualifying for the dividend as well. Maybe one day the BDC's will have their own index and wouldn't interfere with other companies reporting.
    27 Feb 2014, 09:09 AM Reply Like
  • pasieka2
    , contributor
    Comments (2) | Send Message
     
    I believe Wells Fargo has created their own BDC Index.
    4 Mar 2014, 01:03 PM Reply Like
  • smurf
    , contributor
    Comments (6039) | Send Message
     
    Hoping they do pull back. Want to buy MAIN but not at current PPS.

     

    Apples and oranges I know, but reminds me of watching O and all the buy articles when it was 50+. Sector declined and bought it at 39.

     

    Patience, Grasshopper, patience.
    27 Feb 2014, 10:17 AM Reply Like
  • Interesting Times
    , contributor
    Comments (14914) | Send Message
     
    (PSEC) looks attractive right now !
    27 Feb 2014, 05:40 PM Reply Like
  • green tube
    , contributor
    Comments (418) | Send Message
     
    russell axe dropped. my eyeballs are on TCRD. that thing rarely gets cheap, so i've never gotten in. i blew my chance last year when they hit the mid 14s on a secondary offering.
    4 Mar 2014, 02:47 PM Reply Like
  • Land of Milk and Honey
    , contributor
    Comments (8483) | Send Message
     
    Green tube

     

    (TCRD) down 2% today - did you add it? I'm at 2% of my portfolio in BDCs (TCAP, PSEC). Not sure if adding more is too not-diversified, even with another name.
    4 Mar 2014, 06:23 PM Reply Like
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