Software giants are crumbling under AI fears, but savvy closed-end funds (CEFs) are cashing in with fat dividends and smart bets. As AI disrupts tech on February 28, 2026, investors flee software stocks like Microsoft (MSFT) and Salesforce (CRM).
Panic surged after new no-code AI tools sparked meltdown talk, hammering the sector. Yet three tech CEFs BlackRock Science and Technology Term Trust (BSTZ), the BlackRock Science and Technology Trust (BST), and Columbia Seligman Premium Technology Growth Fund (STK) crushed the State Street Technology Select Sector SPDR ETF (XLK) over the past three months.
YCharts data shows STK up sharply in purple, BST in orange, and BSTZ in blue, leaving XLK in the dust amid software woes.
Layoffs. fyi reports tech layoffs dropping from 2022-2023 peaks no mass exodus yet. Google Trends confirms: “AI bubble” searches plummeted post-Thanksgiving, signaling mature optimism over hype.
Why CEFs Win Big
Human managers at these funds talk to insiders, dodging AI pitfalls. STK yields 4.6% with a 3.6% NAV discount bargain versus its five-year 2.9% premium average. Top holdings blend NVIDIA (NVDA), Broadcom (AVGO), and Marvell (MRVL) hardware with Alphabet (GOOGL) and MSFT software.
Closed-end funds like the BlackRock Science and Technology Term Trust (BSTZ), BlackRock Science and Technology Trust (BST), and Columbia Seligman Premium Technology Growth Fund (STK) are outperforming in the tech selloff thanks to active management, leverage, and discounts to NAV.
These features boost income, enhance returns, and create better entries.
Smart Bets Ahead
Critically, SaaS fears overlook proprietary edges these firms hold that solo coders can’t match. With tech employment steady and AI driving economic gains, expect job booms. These CEFs position perfectly: hardware surges fund software buys on the cheap. Analysts forecast 20% upside plus 8% yields as rotations mature, turning panic into profit by mid-2027.