Hundreds of new ETFs have come to market this year with the Global X Cloud Computing ETF (Nasdaq: CLOU) easily ranking among the standouts.
CLOU, which debuted in April, follows the Indxx Global Cloud Computing Index, the fund holds a basket of companies that potentially stand to benefit from the continuing proliferation of cloud computing technology and services. 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 distribution infrastructure and/or hardware components used in cloud and edge computing activities.
The increasingly digital and connected world that form the backdrop for CLOU’s launch is exhibiting significant growth and is expected to continue to grow over the coming years. The cloud computing industry that was estimated to be worth $188 billion in 2018 is expected to be worth over $300 billion by 2022, a nearly 15% annualized growth rate.
Those are among the reasons why CLOU has attracted $461.1 million in assets under management, easily making it one of this year’s most successful new ETFs.
CLOU Call
CLOU’s ascent is all the more impressive when considering that the fund’s 0.68% annual expense ratio is slightly higher than the 0.60% charged by the rival First Trust ISE Cloud Computing Index Fund (NasdaqGM: SKYY).
“This competition is relevant because these funds are not mirror images of each other. The overlap by weight between the two cloud computing ETFs is just 25%, meaning investors should expect diverging returns from these products over time,” reports InvestorPlace.
Most investors are familiar with the cloud, as it is likely the enigmatic space they turn to when it comes time to store photos, music, and other keepsakes when it is either inconvenient or space is limited to store such items on a physical hard drive.
“CLOU may be the way to go for investors looking for the impact of smaller, though not small-cap stocks. The weighted average market capitalization of its holdings is $75.6 billion compared to SKYY’s $169.4 billion,” according to InvestorPlace.
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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.