New Subsection, New Question

[hendi_alex]

I'm glad to see this kind of discussion as IMO there is room for HYLG stocks in most income investor's portfolios. However, I am bothered when I see BDCs and MREITs being discussed as if they represent reasonable risk adjusted investments comparable to other investments. These classes of investments are mostly spread plays that work only so long as the interest rate climate is favorable. When rates and spreads turn in the wrong direction dividends are cut, very often loan covenants are breached, and the number of failed companies among these lenders explodes. A huge number of big names from the previous cycle no longer exist or are tiny shells of their former businesses. The sector is sometimes worthy of investment, but only during the favorable part of the cycle. I currently hold no BCDs or MREITs but will accumulate up to 20% weighting on the other side of the cycle. These are pure timing plays, are generally not suitable for the buy and hold or risk averse investor, and most current investors will get taken to the cleaners when the eventual stampede begins. The average investor should look elsewhere for HYLG candidates.