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Is First Trust Cloud Computing ETF (SKYY) a Strong ETF Right Now?

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The First Trust Cloud Computing ETF (SKYY - Free Report) made its debut on 05/27/2011, and is a smart beta exchange traded fund that provides broad exposure to the Technology ETFs category of the market.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

The fund is sponsored by First Trust Advisors. It has amassed assets over $3.31 billion, making it one of the larger ETFs in the Technology ETFs. SKYY, before fees and expenses, seeks to match the performance of the ISE Cloud Computing Index.

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.

Cost & Other Expenses

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 cousins, 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's 12-month trailing dividend yield comes in at 0.00%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

SKYY's heaviest allocation is in the Information Technology sector, which is about 83.2% of the portfolio. Its Telecom and Consumer Discretionary round out the top three.

When you look at individual holdings, Arista Networks, Inc. (ANET) accounts for about 5.74% of the fund's total assets, followed by Pure Storage, Inc. (class A) (PSTG) and Mongodb, Inc. (MDB).

Its top 10 holdings account for approximately 43.74% of SKYY's total assets under management.

Performance and Risk

So far this year, SKYY has added roughly 15.42%, and it's up approximately 31.54% in the last one year (as of 10/10/2025). During this past 52-week period, the fund has traded between $89.46 and $138.53.

SKYY has a beta of 1.24 and standard deviation of 27.31% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 62 holdings, it effectively diversifies company-specific risk .

Alternatives

First Trust Cloud Computing ETF is an excellent option for investors seeking to outperform the Technology ETFs segment of the market. There are other ETFs in the space which investors could consider as well.

Global X Cloud Computing ETF (CLOU) tracks INDXX GLOBAL CLOUD COMPUTING INDEX and the WisdomTree Cloud Computing ETF (WCLD) tracks BVP NASDAQ EMERGING CLOUD INDEX. Global X Cloud Computing ETF has $298.73 million in assets, WisdomTree Cloud Computing ETF has $322.9 million. CLOU has an expense ratio of 0.68% and WCLD changes 0.45%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Technology ETFs

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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