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Strategies & Market Trends : Dividend investing for retirement
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To: Elroy who wrote (24120)12/26/2015 8:57:17 PM
From: JimisJim  Read Replies (2) of 34328
 
I notice in the prospectus for BDCL that this phrase pops up a LOT: "less financing costs and investor fees." and they achieve their 2X leverage by buying lots and lots of sr. unsecured debt -- part of the fees they deduct from what they will pay you is the cost of them borrowing money to buy the debt to achieve the 2X leverage -- they also deal options and derivatives to achieve that 2X, but in BDCL's case, it appears it's mostly about buying gobs of debt on which the costs will rise as interest rates rise... vs. buying actual BDC shares that can actually do very well in rising interest rate environments because MOST of them charge a variable interest rate while their own borrowing costs are fixed (and currently about as low as they can be)...
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