STK - STK: Past Performance Is Unlikely To Continue
2024-03-22 18:06:53 ET
Summary
- Columbia Seligman Premium Technology Growth Fund has outperformed its peers in the past year, but this performance is unlikely to continue.
- The valuation risk of the tech sector has become too high, which makes the STK closed-end fund vulnerable to a slowdown or correction.
- The fund's use of covered calls may be less efficient in generating income due to rising interest rates and low market volatility.
- Finally, the dividend yield is not as high as on the surface considering the lack of growth, fees, and risk-free rates.
Thesis
Investors in Columbia Seligman Premium Technology Growth Fund ( STK ) have enjoyed terrific returns in the past 1 year or so. The chart next shows the price return of STK, in comparison with two peer funds: Global X NASDAQ 100 Covered Call ETF ( QYLD ) and Nuveen NASDAQ 100 Dynamic Overwrite Fund ( QQQX ) since March 2023. As seen, STK has significantly outperformed both QYLD and QQQX over the period. STK has gained 23.10%, compared to QYLD's 5.83% and QQQX's 2.01%....
STK: Past Performance Is Unlikely To Continue