FS Investment Corp: Who Should Pay for Lower Returns?

FS Investment Corp: Who Should Pay for Lower Returns?

As investment yields decline, business development companies are faced with a tough decision: Cut their dividends or reduce payments to their managers.

This quarter, FS Investment Corp. (NYSE: FSIC) did both, slashing its quarterly dividend from $0.22 per share to $0.19 per share, while agreeing to reduce its base management fee to 1.5% of assets, down from 1.75% of assets for at least one year.

Most publicly traded BDCs have only one manager, or advisor, who is responsible for managing the fund and making investment decisions. In exchange, the manager receives management fees plus incentive fees for good performance.

Continue reading

Source: Fool.com