Business Development Company ETFs provide yields exceeding 12%, outpacing JEPI’s 8% with tax advantages amid surging private credit demand.
Business Development Company ETFs BIZD and PBDC yield 13.65% and 11.50%, respectively, nearly double the 8% yield of the JPMorgan Equity Premium Income ETF (JEPI). The tax advantage stems from BDC dividends being taxed at a maximum 20% capital gains rate, compared to JEPI’s 37% ordinary income tax on options-based payouts.
The BDC industry has grown to $500 billion in assets under management, driven by a 28% compound annual growth rate since 2020. This expansion follows banks retreating from small-business lending after the 2008 financial crisis, creating a financing gap filled by BDCs.
Investors seeking higher yields have turned to BDCs, with options like the VanEck BDC Income ETF (BIZD) and Blackstone Secured Lending Fund (BXSL) offering yields above 13%. The shift reflects broader demand for private credit amid persistent low interest rates and regulatory constraints on traditional lenders.