Income for financial planners is getting harder than ever to find. Baby boomers are retiring at a time when yields on traditional fixed income are negligible. As planners scour new and previously untapped asset classes for sources of retirement income, some are turning to business development corporations, where annual yields of up to 10% can be common.
Technically, a BDC is a pass-through tax structure, analogous to a REIT, allowing individual investors access to formerly institutional-only asset classes such as private debt. BDCs typically buy pools of corporate loans; the repayment of these loans creates the income paid out by the BDC.
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