Business Development Companies or “BDCs” are much riskier that many advisors represent. High commissions push the recommendation to purchase BDCs, but illiquidity prevents the liquidation when things turn bad.
A BDC is a special type of investment that combines attributes of publicly traded companies and private, illiquid investment vehicles. These investments are high-risk. A BDC can provide exposure to investments similar to those associated with risky investments such as private equity or venture capital.
Some BDCs have a redemption process. Late 2025 saw a surge in redemptions in light of a number of bankruptcies. Many investors who could not redeem their shares saw the value of the investments drop significantly. This despite their advisors initially characterizing the investments as “safe.”
Blackstone is a significant entity in the BDC world. It serves as a leading manager. The Blackstone Private Credit Fund, or BCRED, is a “blind pool,” illiquid investment that invests in securities it refers to as “junk.” But the investment touts that an annualized distribution of 9.7%. Advisors rarely disclose that this high rate of return comes with a high risk of loss.
Jeffrey Pederson helps investors recover losses when advisors and broker inappropriately recommend BDCs and other illiquid investments.
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