First Trust ISE Cloud Computing Index Fund

The recent momentum sell-off has exposed a plethora of offenders with ample attention paid to those in the Internet, social media and solar industries.

Although not on par with the beatings taken by the likes of the Global X Social Media Index ETF (NasdaqGM: SOCL) or the Guggenheim Solar Energy Index ETF (NYSEArca: TAN), the First Trust ISE Cloud Computing Index Fund (NasdaqGM: SKYY) has endured its fair share of punishment. Over the past 90 days, SKYY is down 6.3%.

Although investors have bought into the thesis that cloud-computing firms are purveyors of disruptive, game-changing technologies, calls are mounting that, just as they have with social media stocks, that shares of cloud companies have entered bubble territory. [Idea of Dropbox IPO Fails to Lift Cloud ETF]

SKYY had a P/E ratio of 24.4 and a price-to-book ratio of 3.9 at the end of April, according to First Trust data. By comparison, the P/E ratio on the PowerShares QQQ (NasdaqGM: QQQ), the NASDAQ-100 tracking ETF, is below 20.

Over the past three months, only four of SKYY’s top-10 holdings, a group that combines for nearly 37% of the ETF’s weight, have posted gains. The best performers, perhaps not coincidentally, were Oracle (NYSE: ORCL) and Dow component Cisco Systems (NasdaqGS: CSCO), two decidedly “old guard” tech names. [Old Dogs Lift Tech ETFs]

Several of SKYY’s top-10 holdings have posted double-digit losses over the past three months. Luckily for holders of the ETF, the fund does not own shares of Workday (NYSE: WDAY), which is down more than 23% over since Feb. 19.

“Dozens of other cloud service companies have suffered similar highs and lows. And the crash seemed to vindicate the analysts who warned of a bubble. The companies, however, have their champions,” writes Aaron Pressman for Yahoo’s Daily Ticker.