Blade Runner (1982) was a sci-fi noir film starring Harrison Ford and Rutger Hauer that has since become hailed as a classic. It featured Hauer as Roy Batty, a Replicant, with the appearance of a normal man to a casual observer, but is actually a genetically created Super-Soldier designed for combat missions, who has an “expiration date”, i.e., when he is predestined to die. Using his lethal skills, he enlists other Replicants in a search of the scientist who created them in order to nullify their internal killswitch, and is prepared to murder anyone in their way. Ford’s Blade Runner, Deckard, is a bounty hunter tasked to track down and liquidate each member of the group. Although Hauer’s Batty has a short 4-year life span, his adventures cram a half century’s worth of experiences into those 48-months.
The BlackRock Science and Technology Term Trust (NYSE: BSTZ) echoes this scenario. Created as a Closed End Fund specializing in technology, it was designed to have a 12-year lifespan. However, during that time, it was tasked to not only deliver strong returns through savvy technology investments, but also provide a solid income stream for its shareholders.
Covered Call Dividends In a Technology Package For Gen-Z Marketing
Dividends of close to 12% along with a strong technology portfolio offering access to top private companies like TikTok and Databricks have strong appeal to Gen-Z investors.
Although it was designed as a Closed End Fund, BlackRock has seen the rapid changing of technology trends since BSTZ’s 2019 inception: Artificial Intelligence, cloud computing, apps, and a host of other services and products have become ubiquitous in only the past few years. Given the ever-metamorphosizing technology sector landscape, portfolio manager Tony Kim has changed BSTZ’s strategy from an 80/20 ratio of publicly traded companies to private ones to roughly 40/60 public to private ratio. This is primarily to take early advantage of pre-IPO or earlier technology company investing opportunities at a pre-earnings valuation in order to realize exponential gains down the road.
This makes BSTZ a de facto private equity company, although the fund’s $1.6 billion portfolio and BlackRock’s $15 trillion AUM give it more than enough clout to satisfy any SEC risk concerns for shareholders. BSTZ;s hefty 11.9% yield contributes a significant part of the risk mitigation, not to mention marketing appeal.
A recent Forbes article noted that the BSTZ portfolio combination of high dividend, early-stage technology companies with upside from well known technology companies like Nvidia and Spotify could become “the next Gen-Z obsession.” The fact that Gen-Z has become a major impetus for the popularity of ultra-high dividend YieldMax ETFs demonstrated a new market demographic to a sector previously populated primarily by senior citizens. The use of DIvidend Reinvestment Plans (DRIP) and dividend compounding to build portfolio wealth incrementally vs. rolling the dice solely on tech stock capital gains appealed to many younger investors who received a jolt of bearish market reality earlier this spring in the reaction to President Trump’s reciprocal tariff proposals.
BSTZ deploys a covered call strategy not unlike that of JP Morgan’s popular JP Morgan Equity Premium Income ETF (NYSEARCA: JEPI) as a source for monthly dividend. The call premiums are derived against roughly 30–40% of the portfolio, i.e. its publicly traded stocks – at any given time. Since inception, BSTZ has been distributing $12.20 in dividends per share annually, payable monthly. However, unlike a number of the YieldMax ETFs, BSTZ has continued to steadily increase its NAV, as opposed to having to frequently dip into NAV to make up for income shortfalls. As an added bonus for shareholders, market price has consistently been at a discount to NAV; at the time of this writing, it $22.20, vs. a $24.25 NAV, for a -9.61% discount.
A Private Equity Technology Fund in CEF Clothing
BSTZ invests tens to hundreds of millions into cutting edge AI companies like Databricks on behalf of investors that would ordinarily never have the opportunity.
Some of the most popular, cutting edge technology companies at present are China’s Bytedance (parent of Tiktok), Klarna, Databricks, PsiQuantum, and GrubMarket. All of them are privately owned, although Klarna is working its way towards a projected 2026 IPO. That said, the vast majority of individual investors have zero access to stock in these companies, which are only usually available to private equity institutions. However, BSTZ has the deep pockets to not only invest in these companies, but even into venture capital development stage companies if BlackRock’s analysts see multiple on capital ROI at the end of the day.
An added plus is that the level of disclosure required by the SEC for publicly traded entities is overwhelmingly more comprehensive than with the average private equity fund. As such, BlackRock not only gives quarterly updates on BSTZ, but goes in depth with the impact of the private companies’ performance effect on the overall portfolio and updated news on upcoming products and services that those companies are launching.
When viewed in its totality, the Forbes article might have its finger on the pulse of what could become a packaged investment favorite for Gen-Z, with cutting edge tech participation, high dividends, and built in risk mitigation from the biggest asset manager on the face of the Earth.
In addition, BlackRock points out that the expiration date, which is scheduled for the end of June in 2031, is subject to extension with an option to perpetuity. Perhaps BSTZ is echoing Blade Runner 2049 (2017), the sequel which revealed that Batty’s search was not in vain, and that later Nexus series Replicants can age like normal humans with the potential for even longer.
Top Gaining Stocks
Top Losing Stocks