MFICL offers a high yield of 8% with decent credit quality, making it an attractive low-duration investment option for yield-hunting investors. MFIC's financial strength is Baa3 equivalent, with strong asset coverage and senior secured loans, but its debt structure is less favorable. The bond is trading above par with a yield to call of 7.5% and a maturity yield of 8.06%.
Focus on low-duration fixed-income products to capitalize on small price deviations, with a preference for 5-year terms callable after 2 years. GAINI, a 7.875% baby bond from Gladstone Investment Corporation, is undervalued compared to other BDC bonds, offering high yield and low expected volatility. GAIN's credit score is adjusted to 8.21, equivalent to Baa1, due to its smaller market cap, low diversification, and high problem loans, yet it remains among higher-quality BDCs.
For the last couple of years, the stock market has rallied on an unwaveringly positive narrative surrounding the prospects of artificial intelligence (AI). The momentum that's fueled technology stocks in particular carried into 2025 -- until about two weeks ago, when the party music suddenly stopped out of nowhere.
Cathie Wood had one of her busiest days on the trading floor in months on Tuesday. The co-founder, CEO, and ace stock picker at Ark Invest added to 17 different existing positions across her aggressive growth exchange-traded funds in a single day.
Crescent Capital BDC focuses on originating and investing in the debt of private middle-market U.S. companies, aiming for income and capital appreciation. The 5% baby bond FCRX trades at $24.54 with a yield to maturity of 7.16%, offering a 2% higher yield compared to sector benchmarks. CCAP's adjusted credit score equivalent for financial strength is Baa2. It has strong profitability, asset quality, and leverage, though it relies on refinancing unsecured notes.
Ark Invest co-founder and CEO Cathie Wood is one of the best-known growth investors in the realm of exchange-traded funds (ETFs). She also happens to be one of the most aggressive, loading up Ark Invest with high-flying and disruptive investments.
We added Oxford Square Capital Corp.'s 6.25% baby bond maturing in 2026 to our portfolio, yielding over 8%, despite inherent risks. OXSQ's credit score is solid among peers. Its strengths are in leverage and problem loans, but its weaknesses are in profitability and debt structure. Compared to ARCC, OXSQ is less diversified and stable, yet offers higher yield spreads, making it a high-risk, high-reward investment.
Trinity Capital offers stable returns through private credit markets, managing $3.8 billion in assets across five business verticals. TRIN's baby bonds, offering yields around 7.88%, are slightly mispriced, presenting a strong investment opportunity. TRIN's credit score, based on our adjusted Moody's methodology, is Baa1 equivalent, indicating strong financial health and a balanced debt structure.
Cathie Wood bounced back in 2024. The growth investor who rocked the world in 2020 with her market-thumping returns at Ark Invest has proved to be mortal in subsequent years.
Great Elm Capital Corp. (GECC) offers high-yield baby bonds, trading at an 8.9% yield, despite being one of the riskiest BDCs. GECC's mixed portfolio includes 24% equity and significant short-term treasuries, which add to its credit score despite past financial struggles. GECC's leverage structure, with no secured financing, and a 50% debt/assets ratio aligns with industry norms, making its bonds attractive for high-yield seekers.
The yield curve is normalizing, and we aim for 8%+ yields with low downside deviation in our low-duration portfolio. OCCI has higher leverage and worse credit metrics compared to ECC and OXLC, but its preferred stock, OCCIN, offers an 8.5% YTM. Despite OCCI's lower credibility, OCCIN's low duration and yield make it a viable addition for diversification in our low-duration portfolio.
Runway Growth Finance Corp. offers baby bonds with yields above 8%, making them attractive for low-duration portfolios. RWAY's financial strength is comparable to that of investment-grade issuers in the sector. Its profitability and asset coverage are strong, but there are concerns about debt maturities and problem loans. Both bonds trade below par, and their yields are sensitive to market movements; strategic trading can maximize returns.