Up 98.20% this year, the WisdomTree Cloud Computing ETF (WCLD) is on a scintillating pace. Amid compelling cloud spending forecasts, this hot exchange traded fund doesn’t have to cool off next year.
The WisdomTree Cloud Computing Fund seeks to track the price and yield performance, before fees and expenses, of the BVP Nasdaq Emerging Cloud Index, an equally weighted index designed to measure the performance of emerging public companies focused on delivering cloud-based software to customers.
With cloud services spending poised to jump next year, there’s a runway for more growth for WCLD, particularly because revenue growth is one of the factors in its index methodology.
“According to data presented by Aksje Bloggen, global cloud services user spending is set to reach $257.5bn in 2020, a 6% increase in a year. The strong upward trend is expected to continue next year with user spending growing by 18% YoY to $305bn in 2021,” notes the research firm.
Computing Industry Shooting for the Clouds
Cloud computing has been a boon for companies that have been able to capitalize on the increased work-from-home labor force amid the Covid-19 pandemic. As more countries continue to undergo a recovery around the globe, cloud computing will be a crucial sector in assisting recuperating economies.
The cloud computing industry refers to companies that (i) license and deliver software over the internet on a subscription basis (SaaS), (ii) provide a platform for creating software applications which are delivered over the internet (PaaS), (iii) provide virtualized computing infrastructure over the internet (IaaS), (iv) own and manage facilities customers use to store data and servers, including data center Real Estate Investment Trusts (REITs), and/or (v) manufacture or distribute infrastructure and/or hardware components used in cloud and edge computing activities.
Beyond SaaS, WCLD has other services drivers that could propel the fund upwards.
“Analyzed by segments, Desktop as a Service (DaaS) is expected to witness a 95.4% growth in 2020, the most significant increase among all the cloud service market segments. This service enables businesses to deliver cloud-hosted virtual desktops to any device, from anywhere. The increasing trend is expected to continue next year, with the DaaS market rising by 61% YoY,” notes Aksje Bloggen.
“The cloud system infrastructure services (IaaS) market is expected to witness a 26.9% increase next year, up from 15.7% YoY growth in 2020.”
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.