BDCs + CEFS & Armchair Millionaire... Is there a future?
The Armchair Millionaire seems to have single-handedly turned on a lot of people to BDCs and CEFs. But will these vehicles continue to offer the same benefits/returns into the future?
I have a lump sum of cash to deploy but feel like the market is on shaky ground as far as prices and trajectory. We've had quite a run, and though it could be the middle, I personally feel like adding money now is late in this cycle. It's fine if you don't agree; that's not the point I'm asking about here. (We can forego all the cliche posts about market timing.)
This view led me to investigate income investing options besides "SCHD and chill" at a measly 4%. (I know it's 4% + moderate growth, but income is better to me now.) So I'm looking at income options, namely BDCs and CEFs (maybe NEOS funds down the road).
There are so many subs on Reddit, even subs for individual stocks, but there's so little talk about BDCs and CEFs, and no popular dedicated sub. So info about trends and specific BDCs/CEFs is sparse, even on the wider internet.
Anyway, Armchair videos gave me the view these are low-maintenance vehicles to hold. But as I look closer on CEFconnect, CEFAdvisors, and CEFData, so many of these look like a crap shoot. PIMCO funds pay uninterrupted divis mostly, but the share price can still vary widely, and some don't look good at all. As for the rest... it seems a buyer of these funds has to watch developments within each fund, somehow researching all tidbits they can find from the limited info sources.
It looks like it can almost become stock trading, as a fund may have a great record and then take a sharp or gradual turn. And if you're just DCAing every month, you'll miss the important changes.
And then there's the private credit crunch. Some of these are over-leveraged and short on cash with non-accruals climbing and increasing rates of Pix (or however it's spelled).
From what I understand, this category has really grown since 2008 when laws made it harder for banks to fund these loans, which is why BDCs and CEFs do it now. Was this 18 years the golden age? Is it still a developing area, and we can hope for better coverage soon? Will rising/falling rates change this opportunity drastically?
And if you invest in these, where do you find info to stay current?