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Should You Invest in the First Trust Cloud Computing ETF (SKYY)?
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Designed to provide broad exposure to the Technology - Cloud Computing segment of the equity market, the First Trust Cloud Computing ETF (SKYY - Free Report) is a passively managed exchange traded fund launched on 05/27/2011.
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.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Technology - Cloud Computing is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 2, placing it in top 13%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $3.73 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
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.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector--about 84.60% of the portfolio. Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Applovin Corp. (class A) (APP - Free Report) accounts for about 5.96% of total assets, followed by Oracle Corporation (ORCL - Free Report) and Pure Storage, Inc. (class A) (PSTG - Free Report) .
The top 10 holdings account for about 36.80% of total assets under management.
Performance and Risk
The ETF has added roughly 40.55% and was up about 42.25% so far this year and in the past one year (as of 12/23/2024), respectively. SKYY has traded between $83.32 and $130.46 during this last 52-week period.
The ETF has a beta of 1.10 and standard deviation of 31.57% for the trailing three-year period, making it a medium risk choice in the space. With about 64 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Cloud Computing ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SKYY is an outstanding 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 $362.65 million in assets, WisdomTree Cloud Computing ETF has $509.20 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)?
Designed to provide broad exposure to the Technology - Cloud Computing segment of the equity market, the First Trust Cloud Computing ETF (SKYY - Free Report) is a passively managed exchange traded fund launched on 05/27/2011.
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.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Technology - Cloud Computing is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 2, placing it in top 13%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $3.73 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
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.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector--about 84.60% of the portfolio. Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Applovin Corp. (class A) (APP - Free Report) accounts for about 5.96% of total assets, followed by Oracle Corporation (ORCL - Free Report) and Pure Storage, Inc. (class A) (PSTG - Free Report) .
The top 10 holdings account for about 36.80% of total assets under management.
Performance and Risk
The ETF has added roughly 40.55% and was up about 42.25% so far this year and in the past one year (as of 12/23/2024), respectively. SKYY has traded between $83.32 and $130.46 during this last 52-week period.
The ETF has a beta of 1.10 and standard deviation of 31.57% for the trailing three-year period, making it a medium risk choice in the space. With about 64 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Cloud Computing ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SKYY is an outstanding 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 $362.65 million in assets, WisdomTree Cloud Computing ETF has $509.20 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.