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First Trust ISE Cloud Computing ETF Message Board

  • opalockamishabob opalockamishabob Jul 12, 2011 6:13 PM Flag

    Today's Investor's Daily, Page A-6

    EXCHANGE TRADED FUNDS

    First Cloud-Computing ETF Flies

    First Trust Offering
    Capturing latest tech craze, ETF holds Apple, Netflix, Salesforce.com  
    BY TRANG HO
    INVESTOR'S BUSINESS DAILY The new First Trust ISE Cloud Computing Index SKYY   took the market by storm in its debut. A deluge of 2 million shares have changed since its launch last week.
    SKYY puts under one umbrella 40 companies engaged in some aspect of the hottest tech trend. The nebulous term refers to using webbased software or running a web site from a provider’s server instead of your own. That way you save money by not having to buy servers and software licenses.
    Salesforce.com  CRM   — the largest cloud computing provider — does this for 97,700 customers, including blue chip companies.
    Google’s GOOG   new Chromebook — the first cloud-computing laptop — runs entirely on web-based software. It stores all of your files in Google’s clouds so you can retrieve your doctoral dissertation from any computer. Your life doesn’t end if your laptop is lost or stolen.
    SKYY equally weights stocks in each of its three industry classifications: pure play cloud computing companies, nonpure play and technology conglomerates.
    The pure play companies make Internet hardware, software, data storage or send products or services via cloud computing technology. These include Netflix NFLX   , Open Text OTEX   , Rackspace Hosting RAX   , and RightNow Technologies RNOW   . They’re weighted 3% to 3.8% of assets.
    Nonpure plays provide products or services that support the industry like Polycom PLCM   , Iron Mountain IRM   and Financial Engines FNGN   . Weights here are less than 1%.
    The tech conglomerates, at 2.5% each, are blue chip names like Microsoft MSFT   , Apple AAPL   , IBM IBM   and Hewlett Packard HPQ   .
    The ETF is reconstituted twice a year and rebalanced quarterly. It charges investors 0.6% of assets as an annual management fee.
    Big Gainers
    The share prices of 11 of SKYY’s 40 stocks have soared 100% more in the past 12 months. The portfolio’s leader, Opnet OPNT   , surged 163%.
    Only three stocks in the group lost value in the past 12 months. The biggest loser, Cisco CSCO   , lost 29%.
    Ever growing popularity of smart phones, tablets and netbooks, which use Internet-based applications, is driving demand for cloud services. Half of the world’s 2.1 billion Internet users access it from non-PC devices, according to IDC.
    This year, some 80% of new software programs will be available as cloud services, a.k.a software-as-aservice or SaaS, according to the research data firm.
    Forrester Research projects that cloud spending will grow from $40 billion to $241 billion in the global IT market in the next 10 years.
    But risks lurk behind any technology. Companies may cut tech spending because of the economy or be reluctant to adopt new systems.
    A massive hacker attack on Sony’s SNE   PlayStation Network games service in May and a partial outage of Amazon’s AMZN   EC2 cloud service cast a shadow over the security and reliability of cloud computing services.
    Other problems include “hardware or software failure, interruptions or delays in service by third party data center hosting facilities and maintenance providers,” First Trust states in the fund prospectus. “And laws, evolving Internet regulation and other foreign or domestic regulations may limit or affect the operations.”

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    • Futures are way up this morning. These industry leaders will make some ground up fast/ People wanting to harness the webs new future growth in the industry without the huge amount of DD could do well here. The stock picks the winners and leaders and give the shareholders exposure to the market segment.

 
SKYY
29.07+0.0500(+0.17%)Dec 26 3:56 PMEST

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