Entering text into the input field will update the search result below

BST: A Unique Twist On Large-Cap Tech Exposure


  • The BlackRock Science and Technology Trust is an actively managed closed-end fund that employs a covered-call strategy to enhance returns.
  • The fund pays a monthly distribution that yields 6.0%, including a recent hike to the regular rate last December.
  • The fund is a good option among CEFs to gain exposure to tech stocks through a strong performing income vehicle.
  • Looking for a portfolio of ideas like this one? Members of Core-Satellite Dossier get exclusive access to our model portfolio. Get started today »

The BlackRock Science and Technology Trust (NYSE:NYSE:BST) with $720 million in assets under management is an equity closed-end fund 'CEF.' As the name implies, the company invests in both U.S. and non-U.S. science and tech stocks while also employing a call-writing options strategy as part of its active portfolio management. Impressively, the fund has been able to outperform the NASDAQ-100 since the fund's inception in 2014 on a total return basis. BST is also an attractive income vehicle as it currently yields 6% with a monthly distribution of long-term capital gains. With an overall favorable view of the strategy and fund structure, we think BST is a solid choice among CEFs for targeted tech exposure.

(Source: finviz.com)

BST Background

As an actively managed fund, BST is not constrained by any particular benchmark. As mentioned, the fund employs the use of covered calls or options selling on the underlying equity holdings. The purpose is to both generate recurring income and enhance returns as a form of risk management. The fund does not utilize leverage.

The current coverage ratio which reflects the relative amount of the portfolio for which the holdings have been covered by written call options is 32%. By this measure, the strategy as implemented is only a partial hedge on the performance compared to other funds with a more defined buy-write or covered-call strategy and coverage ratio that can approach 100%. The overall function of the options strategy is that it adds to the flexibility for the management team to take tactical positions in the options depending on market conditions. An example would be to sell calls on a position they believe to be overvalued or as a price target to realize gains.

In terms of the underlying holdings, a reasonable comparable for BST is the 'NASDAQ-100 ETF' Invesco

Build a Stronger Portfolio With The Core-Satellite Method

Are you interested to learn how this idea can fit within a diversified portfolio?

With the Core-Satellite Dossier, we sort through +4,000 ETFs/CEFs along with +16,000 U.S. stocks/ADRs to find the best trade ideas.

Get access to all our exclusive features including:

  • Model portfolios built around different strategies.
  • A tracked watchlist of our top picks.
  • A weekly "dossier" with an updated market outlook.
  • Access to analysts with a live chat
  • Exclusive research covering all asset classes and market segments.

Click here for a two-week free trial and explore our content.

This article was written by

Dan Victor, CFA profile picture

Dan Victor, CFA is a market professional with more than 15 years of investment management experience across major financial institutions in research, strategy, and trading roles. Dan is the president of Posto Asset Management - a startup investment advisory firm based in Miami Beach, Florida.

Dan leads the investing group Learn more

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (8)

Sankhya profile picture
Great article.
For a year +, waiting to open a position in this one.
Today added 1/4 postion at 26. Will hold for long term.
ChilledSilver profile picture
Great article. can you please define in mathematical terms how are you calculating 'Total Return'? Also QYLD is a worthy competitor to BST - how would a similar analysis work for QYLD?
Jim_Purzickis profile picture
BST is an excellent fund.

Did you factor in the 6% div into the total return as well as the special dividend last year?
Dan Victor, CFA profile picture
@Stocker1059 if you include special dividend, yield is closer to 11%.. funny thing is that in a different article I mentioned BST with the higher yield figure and other commentators took issue with that.. i believe both are correct depending on how you view it
05 Mar. 2020
Thanks for the article! I also like CII which follows a very similar strategy but has a slightly better expense ratio. Also increased distribution in December.
Both CEFs don't seem to get a lot of coverage here.
No problem with CII...A little higher yield.
I agree fully. Most people here like to play individual stocks and hate management fees that's why no coverage. Nick Ackerman and Douglas Albo really write the good CEF articles.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.