Buy this technical fund before December 31st (and get a 9.3% dividend)

By Michael Foster

On January 1, 2018, I made my boldest forecast of the year: the bitcoin was crashing. HereaEURtms what has happened since:

Crytocurrencies are dying

There are many reasons why bitcoin has cost investors a lot of money: inefficient itaEURms; ittEURtms not private; and glitch and hacking cause bitcoin loss. But the main reason is this: stupid money followed the smart moneyaEUR and ended up holding the bag.

I've seen this story play many times, and that's why I urge you to be contrarian and avoid the pitfalls that market manipulators set up, whether they're spotty titles in the last few years, of housing in the mid-2000s or fantasy money on the Internet. i 2010.

The other side of this coin is the reason why IaEURtmm urges you to do a simple thing in 2019: jump into technology titles. And if you want dividends, do not worry. IaEURt has obtained 2 funds offering 6.3% and 9.3% of payments to choose from.

IaEURtmll shows both (and reveals what I see as the best buy now) a little further.

My prediction number 1 for 2019

If there's anything you can count on, it's the ability of technology companies to print money, because the whole world is embracing technology to communicate, interact, exchange, learn and buy new products.

The proof is in numbers: while technology has one of the highest net profit margins of any S & P 500 sector, at 22.1%, its profits are actually growing: 100% of IT companies reported profits higher than estimates in the third quarter of 2018.

ThataEURtms: one did not miss it!

If you looked at the stocks of FAANG in the last month, however, you got a very different impression. On average, these companies are falling massively, due in large part to the 14.5% drop from Apple (AAPL) atEUR " only with Facebook (FB) slightly above the water (but itaEURtms still in sharp decline for the year):

A terrible month for technology

Zoom out a little, however, and the picture is much brighter. FAANG stocks are still up two digits, on average, in a year when the S & P 500 is down:

FAANG still outperforming

I would not be surprised if this news surprised you. The financial press beat tech companies for a lot of reasons "privacy scandals" on Facebook and Alphabet (GOOGL), weakening of subscription growth a Netflix (NFLX), the commercial war for AppleaEUR "but the reality is that technology is still working well.

But the market does not reward these titles.

If we look at net cash flows for the Invesco QQQ Trust (QQQ), we see that $ 1.44 billion has left this technology-focused ETF only in the last three months. Given that this is a popular ETF to track the Nasdaq 100, a technology-heavy index, these net outflows show that stupid money is panicked and offshore sales "the opposite of the setup that caused the crash to bitcoin.

If we look at the Select Sector SPDR ETF Technology (XLK) , things seem even better for a contrarian. While hedge funds and institutional investors sometimes buy QQQ, these groups do not use enough XLKs. And this fund saw billions of net outflows for 2018: a total of $ 2.44 billion came out of XLK in the last three months.

The conclusion is clear: stupid money is coming out of technology, which means that money has the opportunity to buy it before the pendulum rocks back in the other direction and we see inflows.

The Tech Play

Long-time readers know that one of my favorite ways to play with technology is through closed-end funds CEFs), because these funds give you generous dividends while you're upside-down, and some technology CEFs have shown a serious upside over the years.

But letaEURtms seems a little closer to four options: the two ETFs I just mentioned (XLK and QQQ) and two CEF contenders.

First of all, letaEURtms looks at the 10 best participations of XLKaEURtms:

Source: ALPS Portfolio Solutions Distributor

There are many large-cap companies in this ETFaEURtms portfolioaEUR "names of families that have been beaten recently, but not nearly as much as some technology stocks with smaller capitalisations.

Likewise, the other ETF, QQQ, sports holdings that focus on many technological heavyweights, with some important differences:

Source: Invesco

PepsiCo (PEP) is Comcast Corp (CMCSA) arenaEURtmt technology companies from any effort (and CMCSA is undoubtedly one of the companies interrupted by technological innovations), which means that this portfolio does not offer the same technological exposure as XLK. If we want to invest only in technology, we should choose XLK on QQQEUR "but only if weaEURtmre will be limited to ETFs.

But I would not do it, because there are two better alternatives: the CEF I mentioned before.

2 CEF Tech which pay up to 9.3% of dividends

IaEURtmm talking about the Columbia Seligman Premium Tech Growth Fund (STK) , which pays a 9.3% dividend, and the BlackRock Science and Technology Trust (BST) , with a regular dividend of 6.3%. IaEURtmve wrote of my appreciation for BST many times in the past; itaEURtms up double-digit from the beginning of the year, while STK is down 9%:

BST wins in 2018

That doesnaEURtmt means that BST is the best choice now, though. To decide which is the best choice, we need to dig deep into every fundaEURtms fund.

LetaEURtms starts with BST, which recently made an aggressive bet on payment companies. ThataEURtms part of why itaEURtms has been strong in recent times, since bitcoin has failed to replace the payment solutions of the major holdings of BSTaEURtms, such as Square (SQ) is Visa (V). But this fund also has a lot of exposure to China:

BST looks to China at EUR