Some wealth advisors are urging clients to sell non-traded business development companies at full net asset value and rotate into publicly traded BDCs trading at a median discount of about 25% to NAV. The strategy exploits structural differences between the two types of funds, as non-listed BDCs can limit redemptions but pay out at NAV, while listed BDC prices reflect market stress. John Cole Scott of CEF Advisors called it a math problem when the same manager runs both a non-traded BDC at NAV and a listed sibling at a 24% to 27% discount. However, the trade is not always straightforward because private and public BDCs from the same manager may hold different assets with varying risk and leverage, and public BDCs often charge higher fees. Some institutional-focused private BDCs, such as those held by Clearstead, are not being rotated, as Chief Investment Officer Aneet Deshpande said comparing them to public BDCs is an apples-to-oranges comparison.
Apollo Global Management LLC Class A
Ares Management LP
BlackRock Inc