The First Trust Cloud Computing ETF (SKYY) was launched on 05/27/2011, and is a passively managed exchange traded fund designed to offer broad exposure to the Technology - Cloud Computing segment of the equity market.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Cloud Computing is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 6, placing it in top 38%.
The fund is sponsored by First Trust Advisors. It has amassed assets over $6.87 billion, making it one of the largest ETFs attempting to match the performance of the Technology - Cloud Computing segment of the equity market. SKYY seeks to match the performance of the ISE Cloud Computing Index before fees and expenses.
This Index is a modified equal dollar weighted index designed to track the performance of companies actively involved in the cloud computing industry.
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.60%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.15%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector--about 84.70% of the portfolio. Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Digitalocean Holdings, Inc. (DOCN) accounts for about 5% of total assets, followed by Oracle Corporation (ORCL) and Mongodb, Inc. (MDB).
The top 10 holdings account for about 36.18% of total assets under management.
Performance and Risk
Year-to-date, the First Trust Cloud Computing ETF has gained about 24.73% so far, and is up roughly 40.22% over the last 12 months (as of 11/08/2021). SKYY has traded between $80.15 and $117.96 in this past 52-week period.
The ETF has a beta of 0.97 and standard deviation of 26.30% for the trailing three-year period, making it a medium risk choice in the space. With about 67 holdings, it effectively diversifies company-specific risk.
First Trust Cloud Computing ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SKYY is an excellent option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
WisdomTree Cloud Computing ETF (WCLD) tracks BVP NASDAQ EMERGING CLOUD INDEX and the Global X Cloud Computing ETF (CLOU) tracks INDXX GLOBAL CLOUD COMPUTING INDEX. WisdomTree Cloud Computing ETF has $1.42 billion in assets, Global X Cloud Computing ETF has $1.51 billion. WCLD has an expense ratio of 0.45% and CLOU charges 0.68%.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free reportFirst Trust Cloud Computing ETF (SKYY): ETF Research ReportsOracle Corporation (ORCL) : Free Stock Analysis ReportMongoDB, Inc. (MDB) : Free Stock Analysis ReportGlobal X Cloud Computing ETF (CLOU): ETF Research ReportsWisdomTree Cloud Computing ETF (WCLD): ETF Research ReportsDigitalOcean Holdings, Inc. (DOCN) : Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research
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