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Columbia Seligman: "Premium" Play on Technology

09/23/2016 9:00 am EST

Focus: FUNDS

Bryan Perry

Editor, Cash Machine, Premium Income, Quick Income Trader, Instant Income Trader

Fund managers seeking to up their portfolio weightings are ploughing money into the tech space, asserts Bryan Perry, income expert and editor of Cash Machine.

As a result, software, chips, cloud and networking stocks are on the move to new 2016 highs, much of it attributed to the mobile-office digital revolution and mobile e-commerce.

In harnessing this fresh wave of investor interest that would satisfy our high-yield profile, I’m going this month with a covered-call, closed-end fund that owns a portfolio of 100% technology stocks.

Columbia Seligman Premium Technology Growth Fund (STK) was a prior holding that we sold just before the January-February sell-off this year when it looked like the economy was headed for a sharp slowdown.

This closed-end fund has many of the leading stocks in the tech sector as its top holdings.

With the economy and the tech sector behaving much better, the risk/reward proposition and forward visibility make this fund an ideal holding for our Aggressive High Yield Portfolio.

Shares of STK boast a current yield of 10.46% made up of call option premium, capital gains and no return of capital.

Having some pure technology exposure in the current market landscape should pay off well during the second half of the year as the fourth quarter is seasonally the strongest for technology spending budgets.

STK shares have been working their way higher of late. As the market continues to favor technology growth stocks and high-yield assets in general, STK offers a highly attractive combination of tech sector exposure with a double-digit yield.

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