Cloud Computing ETF Hits Markets Today
With Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN) and other tech giants on board, the mainstream move to the cloud is officially underway. Investment services are playing catch-up, as today First Trust launched a new ETF that will focus solely on Cloud Computing businesses. The new cloud computing index fund will trade as SKYY, and will seek to “replicate a modified equal-dollar weighted index comprised of companies involved in the cloud computing industry, including both “pure play” companies and those with operations that more generally involve cloud computing,” says etfdb.com.
Companies included in the fund will be organized into three groups: pure play companies, which are direct service providers for the cloud or companies that use cloud technology to transfer goods or services, non pure play companies, which are focused outside cloud computing but provide goods and services to direct cloud providers, and technology conglomerate companies, which “indirectly utilize or support the use of cloud computing technology.”
Currently the ETF is composed of 10% conglomerates and 90% of pure and non pure play companies. As of today there are 40 holdings in the fund, the majority composed of 33% software companies, 23% internet and software services companies, and 17% communications equipment companies, with the rest of holdings scattered across the tech sector.
In case your still a little hazy on the details of cloud computing, Scott Neuman offers a brief explanation here, “Simply put, the cloud allows the storage and retrieval of information from a remote server via a network, rather than an individual PC. The advantages include on-demand network access to information by way of PCs, tablets, smartphones and other computing devices.” IT research firms are projecting spending on cloud computing to grow at 4-5x the pace of wider IT spending. Although, as Gartner (NYSE:IT) notes, at a rate $90-100 billion dollars this year, spending on cloud computing services will account for just 2% of the global tech budget in 2011.