Designed to provide broad exposure to the Technology - Cloud Computing segment of the equity market, the First Trust Cloud Computing ETF (SKYY Quick QuoteSKYY - Free Report) is a passively managed exchange traded fund launched on May 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 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 1, placing it in top 6%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $2.96 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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.6%, making it on par with most peer products in the space.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, 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 82.7% of the portfolio. Telecom and Consumer Discretionary round out the top three.

Looking at individual holdings, Alphabet Inc. (class A) (GOOGL) accounts for about 5.53% of total assets, followed by International Business Machines Corporation (IBM) and Mongodb, Inc. (MDB).

The top 10 holdings account for about 37.87% of total assets under management.

Performance and Risk

So far this year, SKYY has lost about 1.78%, and is up about 6.76% in the last one year (as of 01/05/2026). During this past 52-week period, the fund has traded between $89.46 and $143.46.

The ETF has a beta of 1.20 and standard deviation of 25.29% 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 1 (Strong 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) 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 $261.03 million in assets, WisdomTree Cloud Computing ETF has $283.07 million. CLOU has an expense ratio of 0.68%, and WCLD charges 0.45%.

Bottom Line

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