Internally vs. Externally Managed BDCs

Prospect Capital and Ares Capital are two of the biggest externally managed BDCs in the market today, while Main Street Capital and American Capital Ltd. are two of the larger internally managed BDCs. What are the benefits and drawbacks of utilizing each of these management structures and how does it impact shareholders?

In the following video, Motley Fool Financials Bureau Chief David Hanson sits down with Fool contributor and BDC analyst, Jordan Wathen. Jordan highlights why Ares and Prospect chose to be externally managed and explains the potential downsides of owning an internally managed BDC staffed with an questionable management team.

Are BDCs the top high-yielding stocks to buy today?
The smartest investors know that dividend stocks like BDCs can simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

The article Internally vs. Externally Managed BDCs originally appeared on

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story