Welcome to the April 2026 Portfolio Update for the Muzinich BDC Income Fund – Active ETF (BDCI or the Fund).
The Fund delivered a return of 0.50% (AUD) during the month, compared with the Benchmark3 return of 1.83% (AUD). The Fund declared its first monthly dividend of $0.17 per unit announced on 28 March 2026.
The Muzinich Public BDC Income Strategy (the Strategy) delivered a return of 7.06% (USD) during the month, compared with the Benchmark return of 6.42% (USD). Returns from the Fund and the Strategy will differ for various reasons, including due to exchange rate movements. This was particularly the case this month with the appreciation in the AUD against the USD.
Fund Performance1
Strategy Performance1
Portfolio Commentary
The Fund’s performance was primarily driven by its overweight position in Hercules Capital (HTGC) and Bain Capital Specialty Finance (BCSF) and underweight position in Blue Owl Technology Finance Corporation (OTF). OTF shares declined amid media reports of high redemption pressure facing Blue Owl non-traded BDCs and particularly, on redemptions reaching 40% in Blue Owl’s non-traded technology-focused BDC.
Despite continued conflict and geopolitical tension between US and Iran, the US equity market enjoyed a broad-based rally. Investors looked through the risks and refocused on strong Q1 2026 US corporate earnings. US large cap stocks (S&P 500 index) rallied 10.4% in April, led by Semiconductors, Technology and Financials sectors that reported strong earnings. With 63% of the S&P 500 having reported Q1 2026 results, 84% of companies beat earnings-per-share estimates and 81% exceeded revenue forecasts. The blended year-over-year earnings growth rate has climbed to 27.1%, per FactSet Earnings Insight as of 1 May 2026. Meanwhile, a spike in energy costs sparked fresh inflation fears, prompting a swift and hawkish shift in monetary policy expectations, with investors pushing back anticipated rate cuts or preparing for additional tightening by the US Federal Reserve. April’s Federal Reserve meeting resulted in no change to rates. Current Chairman, Jerome Powell, also announced his intention to remain on the Federal Open Market Committee as a governor after his term ends in May.
The U.S private credit market continued to remain in media headlines, particularly on recent news surrounding heightened redemptions in non-traded BDCs. Investors identified an attractive buying opportunity in heavily-discounted public BDCs, with the Wall Street Journal reporting that depressed public valuations may be contributing to elevated non-traded BDC withdrawals as investors shift money out of non-traded vehicles at NAV and into discounted public vehicles. Muzinich notes that the public BDCs in which the Fund invests are permanent capital vehicles and do not have redemption risk. On the capital markets front, debt markets remained open for BDCs. Monroe Capital Corporation completed a merger with Horizon Technology Finance Corporation. Investor sentiment improved in April as the S&P BDC index appreciated by 6.42% in USD.
In Muzinich’s view, BDCs are attractively valued, trading at deep NAV discounts (0.86x S&P BDC index as of 30 April 2026, per Bloomberg) and BDCs reporting Q1 2026 earnings in May could provide greater clarity on actual credit performance against deep concerns by the market. Public BDC valuations may also benefit from the active stock buyback programs of BDCs which are in place. After years of credit spread tightening, there are early signs of credit spread widening amid uncertainties. Muzinich remains cautiously positioned in software credits (look through exposure at 19% versus industry average at 25%) and is closely monitoring the maturity walls in these credits given its view of risk being more about refinancing rather than traditional earnings recessions. Nonetheless, Muzinich believes that overall, current valuations overstate the risks and that valuations are very attractive.
Notes: 1. The Fund inception date is 25 March 2026. Fund performance is in AUD and calculated based on net asset value per unit, which is after management fees and expenses and assumes that all distributions are not reinvested in the Fund. Periods greater than 1 year are annualised. 2. Income Return is calculated based on distributions going ex during the period relative to the opening NAV. Price Return reflects the change in NAV excluding distributions. Total Return is the sum of Income Return and Price Return and does not assume reinvestment unless otherwise stated. 3. Benchmark for the Fund and Strategy is S&P BDC Index USD Price Return (unhedged). 4. The Strategy returns in USD reflect the gross returns of the Muzinich BDC Equity in USD Composite. Muzinich’s GIPS compliant composite presentation is available upon request. Strategy AUD returns reflect the conversion of the USD composite returns into AUD, using monthly exchange rates which are also available upon request. The Fund and the Strategy share the same Portfolio Manager and investment team and investment approach; however, differences in cash flows, fees, expenses, calculation methods, and portfolio characteristics may result in different returns. As the Fund has a limited track record, Strategy performance is shown for context. Performance is net of fees and does not include the reinvestment of dividends. Returns greater than one year are annualised. 5. The Strategy inception date is 7 February 2014.
DISCLAIMER: AGP Investment Management Limited (AGP IM) (ABN 26 123 611 978, AFSL 312247) is a wholly owned subsidiary of Associate Global Partners Limited (AGP) (ABN 56 080 277 998), a financial institution listed on the ASX (APL). AGP IM is the Responsible Entity of Muzinich BDC Income Fund – Active ETF (ARSN 691 941 401) (the Fund).
This material has been prepared for general information only and does not constitute investment advice or a recommendation. Neither AGP IM, AGP, their related bodies corporate, entities, directors or officers guarantees the performance of, or the timing or amount of repayment of capital or income invested in the Fund or that the Fund will achieve its investment objectives. Past performance is not indicative of future performance.
Any references to ‘We’, ‘Our’, ‘Us’, or the ‘Team’ used in the context of the portfolio commentary, is in reference to Muzinich, as investment manager for the Fund.
Any economic or market forecasts are not guaranteed. Any references to particular securities or sectors are for illustrative purposes only and are as at the date of publication of this material. This is not a recommendation in relation to any named securities or sectors and no warranty or guarantee is provided that the positions will remain within the portfolio of the Fund. Any securities identified and described are for illustrative purposes only and do not represent all of the securities purchased, sold or recommended for client accounts.
The reader should not assume that an investment in the securities identified was or will be profitable. Investors should seek professional investment, financial or other advice to assist the investor determine the individual tolerance to risk and needs to attain a particular return on investment. In no way should the investor rely on information contained in this material. Investors should read the Fund’s Product Disclosure Statement and Target Market Determination in full before making a decision to invest in the Fund. These documents are available at www.associateglobal.com.
