non-traded business development companies (BDCs): Good for the Broker, Bad for the Client
BDCs: Good for the Broker, Bad for the Client
In the wake of the implosion of many non-traded REITs, non-traded business development companies (BDCs) have emerged as a relatively new structure that is getting a lot of attention. But with high up-front fees and limited liquidity, some say they're not good for the client.
BDCs use a structure similar to non-traded REITs in that capital is raised in a continuous private offering, but BDCs are regulated under the 1940 Act that governs mutual funds. The big difference is that they're valued quarterly, while non-traded REITs are required to publish their valuations no later than 18 months after the conclusion of the offering.