BDC ETF performed poorly in 2025, with an annual fall of nearly 10%—but this is just the tip of the iceberg.

Root of the problem: The profitability model of BDCs (Business Development Companies) relies on floating rate loans, and their income shrinks when the Federal Reserve cuts interest rates. Currently, the 12-month dividend yield of the BIZD fund is as high as 12.38%, which sounds tempting, but don't be fooled—high yield does not equal high safety.

Risk Alert:
• 42% of BDC practitioners expect the operating environment to worsen in 2026.
• 23% indicate that dividend/profit pressure is the primary concern
• More and more BDCs may face a fall in interest rates.

Core contradiction: These types of funds attract investors through high dividends, but once the interest rate policy turns, dividends may shrink significantly. If the new Federal Reserve chairman continues aggressive rate cuts in 2026, BIZD may face pressure again.

In simple terms: high-yield traps. Investors seeking stable cash flow need to be cautious.