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Should You Invest in the First Trust Cloud Computing ETF (SKYY)?
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The First Trust Cloud Computing ETF (SKYY - Free Report) 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.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Investor-friendly, sector ETFs provide many options 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 5, placing it in top 31%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $2.77 billion, making it one of the larger 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.
The ISE Cloud Computing Index is a modified market capitalization weighted index designed to track the performance of companies actively involved in the cloud computing industry.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.60%, making it on par with most peer products in the space.
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 86.10% of the portfolio. Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Pure Storage, Inc. (class A) (PSTG - Free Report) accounts for about 4.82% of total assets, followed by Arista Networks, Inc. (ANET - Free Report) and Nutanix, Inc. (class A) (NTNX - Free Report) .
The top 10 holdings account for about 39.05% of total assets under management.
Performance and Risk
The ETF return is roughly 45.39% so far this year and it's up approximately 39.81% in the last one year (as of 12/12/2023). In that past 52-week period, it has traded between $55.50 and $83.79.
The ETF has a beta of 1.06 and standard deviation of 31.86% for the trailing three-year period, making it a medium risk choice in the space. With about 65 holdings, it effectively diversifies company-specific risk.
Alternatives
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.
Global X Cloud Computing ETF (CLOU - Free Report) tracks INDXX GLOBAL CLOUD COMPUTING INDEX and the WisdomTree Cloud Computing ETF (WCLD - Free Report) tracks BVP NASDAQ EMERGING CLOUD INDEX. Global X Cloud Computing ETF has $584.91 million in assets, WisdomTree Cloud Computing ETF has $697.49 million. CLOU has an expense ratio of 0.68% and WCLD charges 0.45%.
Bottom Line
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.
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Should You Invest in the First Trust Cloud Computing ETF (SKYY)?
The First Trust Cloud Computing ETF (SKYY - Free Report) 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.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Investor-friendly, sector ETFs provide many options 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 5, placing it in top 31%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $2.77 billion, making it one of the larger 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.
The ISE Cloud Computing Index is a modified market capitalization weighted index designed to track the performance of companies actively involved in the cloud computing industry.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.60%, making it on par with most peer products in the space.
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 86.10% of the portfolio. Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Pure Storage, Inc. (class A) (PSTG - Free Report) accounts for about 4.82% of total assets, followed by Arista Networks, Inc. (ANET - Free Report) and Nutanix, Inc. (class A) (NTNX - Free Report) .
The top 10 holdings account for about 39.05% of total assets under management.
Performance and Risk
The ETF return is roughly 45.39% so far this year and it's up approximately 39.81% in the last one year (as of 12/12/2023). In that past 52-week period, it has traded between $55.50 and $83.79.
The ETF has a beta of 1.06 and standard deviation of 31.86% for the trailing three-year period, making it a medium risk choice in the space. With about 65 holdings, it effectively diversifies company-specific risk.
Alternatives
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.
Global X Cloud Computing ETF (CLOU - Free Report) tracks INDXX GLOBAL CLOUD COMPUTING INDEX and the WisdomTree Cloud Computing ETF (WCLD - Free Report) tracks BVP NASDAQ EMERGING CLOUD INDEX. Global X Cloud Computing ETF has $584.91 million in assets, WisdomTree Cloud Computing ETF has $697.49 million. CLOU has an expense ratio of 0.68% and WCLD charges 0.45%.
Bottom Line
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.