A Comparison of Investor Access Points

Accessing Direct Lending: Where Structure Drives Outcomes

Investors seeking exposure to middle-market direct lending have multiple access points, each offering a distinct mix of liquidity, transparency, fees, convexity, downside protection, and return potential. Four primary structures, publicly traded BDCs, private BDCs/interval funds, institutional funds/SMAs, and secondary fund purchases, each provide different combinations of these attributes, shaping how capital is deployed and how risk is experienced. In the current environment, publicly traded BDCs are trading at average discounts of approximately 20% to NAV, with certain names at 25–30% discounts. We beleive these dynamics introduce both yield enhancement and potential re-rating upside, and share thematic similarities with secondary fund purchases, where exposure is acquired below NAV, embedding convexity and a margin of safety. The report examines how each access point compares across key dimensions and what these structural differences may imply for portfolio construction.

Table of Contents

1. Key Takeaways
2. Executive Summary
3. Publicly Traded BDCs
4. Private BDCs / Interval / Evergreen Funds
5. Institutional Commingled Funds / Separate Accounts (SMAs)
6. Secondary Fund Purchases
7. Comparative Overview 
8. Overview: Public BDC Discounts vs. Secondary Purchases
9. Historical Context: Discounts Across Cycles
10. Key Takeaways & Implications
11. Conclusion