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CA News 2024


Three investments in artificial intelligence with high returns of up to 9.1%

The stock market is rallying despite major concerns in the market. Although Bloomberg recently reported that there is no relief in sight for bonds, there are signs that relief may be on the way. Although 10-year Treasury yields are lower than their recent highs last October, they are expected to continue falling due to a slowing economy and labor market. This could lead to a bullish trend for bonds and technology stocks that trade opposite to yields.

One way to benefit from the potential rally in bond and technology stocks is to invest in closed-end funds (CEFs) that sell covered calls on their technology investments. These funds can use leverage to sell options and generate higher returns, with some funds receiving discounts of up to 17% and achieving an average return of 7.8%. One such fund is the Nuveen Nasdaq 100 Dynamic Overwrite Fund (QQQX), which sells covered calls on tech-heavy Nasdaq 100 stocks to generate income. Another option is the BlackRock Science and Technology Term Trust (BSTZ), which focuses on companies with rapid growth potential in the science and technology sector. In addition to listed technology companies, the BSTZ fund also offers exposure to private holding companies.

The Virtus Artificial Intelligence & Technology Opportunities Fund (AIO) is another CEF that provides exposure to AI companies and other technology opportunities. This fund invests in both AI companies and other companies that can benefit from AI technology. While AIO lags behind ETF competition, it could potentially benefit from the current 7% discount over time as it approaches the end of its term around October 29, 2031. AIO also uses debt to strengthen its portfolio, enabling higher returns on its investments. .

Overall, these CEFs provide investors with a way to generate income safely and systematically during periods of high market volatility. With the potential for discounts and higher returns, investors can take advantage of opportunities in the bond and technology stock markets while managing risk effectively. By considering the different strategies and focuses of each fund, investors can diversify their portfolios and position themselves to benefit from potential market rallies in the future.