Conclusion

We believe that, in the current environment, public BDCs trading at discounts and secondary fund purchases represent compelling structural entry points into middle-market direct lending. While public BDCs have historically been associated with retail participation, both high-net-worth and institutional investors may benefit from their liquidity and embedded convexity, particularly when paired with larger secondary allocations.

Both public BDC discounts and secondary purchases introduce opportunities to acquire exposure at a margin of safety, enhancing convexity and supporting portfolio resilience across market cycles.

Private BDCs and interval funds should be avoided until the gaps in NAVs compared to public counterparts narrow, and/or investors achieve better visibility on current redemption trends from these vehicles.