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Non-Traded BDCs Post High Returns in the Second Quarter

Although fundraising for non-traded business development companies lagged in the second quarter of 2016 with just $500 million in equity raised, returns were up significantly after three straight quarters of losses, according to Summit Investment Research’s Non-Listed BDC Return Index.

Non-traded BDCs reported a high 7.62 percent return in the second quarter of 2016 after posting a 0.48 percent loss in the first quarter, bringing the year-to-date return to 7.14 percent. However, in the last 12 months, non-traded BDCs still had negative returns with a 1.62 percent loss.

Non-traded BDCs have experienced declining returns over the last four years. After peaking in 2012 at 13.55 percent, returns steadily declined to 9.78 percent in 2013, 3.28 percent in 2014, and -5.24 in 2015. For the three-year period ended December 31, 2015, BDCs had a low 2.61 percent average annual return.

Several non-traded BDCs continue to report higher net asset values after the second quarter ended, and Summit expects another quarter of positive returns is on the horizon. However, the research firm noted that with continued market uncertainty, the companies could continue to experience high volatility in their quarterly returns.

Summit Investment Research has been active since April 2016 and covers non-traded REITs, business development companies, interval funds, and listed REITs (that acquired non-traded REITs or were once non-traded). The company’s research can be utilized by a variety of industry clients including financial advisors, registered investment advisors, broker-dealers, sponsors, service providers like law firms, due diligence firms, industry organizations, and news organizations, and institutions.

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