Netflix Content Deal Boosts Cloud ETF

ETF Trends

Shares of Netflix (NFLX) are soaring almost 7% Monday after the provider of streaming entertainment content unveiled a deal for a new original series with DreamWorks Animation (DWA). Netflix said the deal is the largest for original content in the company’s history with a 300 hours of fresh content expected.

The deal for Netflix comes on the heels of the success of “House of Cards,” the company’s flagship original series, and at a time when the company needs to fill a void in its animated programming. Less than a month, ago Netflix let its content agreement with media giant Viacom (VIA) expire and that deal included popular animated series such as “Dora The Explorer” and “SpongeBob SquarePants,” reports Rex Crum for MarketWatch.

News of the Netflix/DreamWorks agreement is benefiting one ETF and it is a fund that some investors may not think features the largest allocation the stock. The First Trust ISE Cloud Computing Index Fund (SKYY) is up 2.1% on the Netflix news. While Netflix fits the bill as a “hot” or “story” stock, it is does not command a large presence in the ETF world. [Netflix Sell Off Weighs on Internet ETFs]

Despite the fact that Netflix usually is not the first stock investors associate with cloud computing, SKYY is the ETF with the largest weight to the stock at almost 6.6%. That makes Netflix SKYY’s second-largest holding behind Oracle (ORCL), according to First Trust data.

Cloud computing refers to the delivery of a service instead of an actual physical product to the consumer, utilizing a network (such as the Internet) to transfer software, information, and other shared resources. [Chart of the Day: Cloud Computing ETF]

When SKYY debuted nearly two years ago, some critics assailed the fund for being too much of a niche concept to appeal to investors. However, the ETF has attracted almost $94 milion in assets under management and has posted gains of 15% in the past 12 months.

Obviously, Netflix is a recognizable stock and one that makes it easy for investors to pay some attention to SKYY every now and then. However, the ETF could offer some long-term growth as spending on public cloud services is expected to jump to $210 billion by 2016 from less than $80 billion in 2010, reports Louis Columbus for Forbes.

First Trust ISE Cloud Computing Index Fund

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SKYY

ETF Trends editorial team contributed to this post.

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.

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