Executive Summary

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. We examine four primary routes, publicly traded BDCs, private BDCs/interval funds, institutional commingled funds and SMAs, and secondary fund purchases, and compare their structural characteristics to inform portfolio construction decisions.

Given current market conditions, particular attention is warranted around publicly traded BDCs, which are trading at average discounts of approximately 20% to NAV, with certain names at 25–30% discounts. These dynamics share thematic similarities with secondary fund purchases, where exposure is acquired below NAV, embedding convexity and a margin of safety compared to private BDCs and interval funds.