Internally vs. Externally Managed BDCs

Prospect Capital and Ares Capital are two of the biggest externally managed BDCs in the market today, while Main Street Capital and American Capital Ltd. are two of the larger internally managed BDCs. What are the benefits and drawbacks of utilizing each of these management structures and how does it impact shareholders?

In the following video, Motley Fool Financials Bureau Chief David Hanson sits down with Fool contributor and BDC analyst, Jordan Wathen. Jordan highlights why Ares and Prospect chose to be externally managed and explains the potential downsides of owning an internally managed BDC staffed with an questionable management team.

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Jordan Wathen

"The liabilities are always 100 percent good. It’s the assets you have to worry about." - Charlie Munger

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