Is This the Worst-Performing Dividend ETF?

Core Viewpoint - The VanEck BDC Income ETF is experiencing significant challenges in 2025, primarily due to its sensitivity to interest rate fluctuations, which could worsen if rates continue to decline [1][5][9]. Group 1: ETF Performance - The VanEck BDC Income ETF is among the worst-performing ETFs of 2025, down approximately 10% year to date, despite having a high dividend yield of 12.38% [2][3][5]. - The ETF's performance is particularly poor compared to other dividend funds, indicating it is a laggard in its category [3][9]. Group 2: Business Development Companies (BDCs) - BDCs provide capital to distressed or small and midsize companies that traditional creditors often overlook, making them attractive to income investors due to their high yields [4][5]. - The structure of BDCs involves floating-rate notes (FRNs), which makes them sensitive to interest rate changes; they typically benefit from rising rates but suffer when rates fall [6][8]. Group 3: Dividend Reliability - Despite the high yield, the reliability of dividends from BDCs is questionable, with many experts predicting potential dividend cuts in the coming quarters due to lower interest rates [9][10]. - A recent survey indicated that 42% of respondents believe the operating environment for BDCs will worsen in 2026, with dividend and earnings pressure being a major concern [10][11].