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Another Cloud Computing ETF is on The Way

This article was originally published on ETFTrends.com.

Cloud computing is one of the fastest-growing corners of the technology universe, but as of today, there is only one exchange traded fund dedicated to the industry.

Global X is looking to change that. The New York-based ETF issuer recently filed plans for the Global X Cloud Computing ETF, which will target the the Indxx Global Cloud Computing Index.

“The Underlying Index is designed to provide exposure to exchange-listed companies that are positioned to benefit from the increased adoption of cloud computing technology, including but not limited to companies whose principal business is in offering computing Software-as-a-Service (“SaaS”), Platform-as-a-Service (“PaaS”), Infrastructure-as-a-Service (“IaaS”), managed server storage space and data center real estate investment trusts (“REITs”), and/or cloud and edge computing infrastructure and hardware (collectively, “Cloud Computing Companies”), as defined by Indxx LLC, the provider of the Underlying Index (“Index Provider”),” according to the Global X filing with the Securities and Exchange Commission (SEC).

With the SEC affected by the ongoing government shutdown, new ETFs are currently not being approved.

Competition

When the Global X Cloud Computing ETF debuts, it will established competition in the form of the First Trust ISE Cloud Computing Index Fund (SKYY) .

SKYY tracks the ISE Cloud Computing Index, which “is a modified equal dollar weighted index designed to track the performance of companies actively involved in the cloud computing industry. To be included in the index, a security must be engaged in a business activity supporting or utilizing the cloud computing space, listed on an index-eligible global stock exchange and have a market capitalization of at least $100 million,” according to First Trust.

SKYY, which turns eight years old in July, has over $1.7 billion in assets under management.

The Global X Cloud Computing ETF will be a cap-weighted ETF that uses a replication strategy.

“A replication strategy is an indexing strategy that involves investing in the securities of the Underlying Index in approximately the same proportions as in the Underlying Index. However, the Fund may utilize a representative sampling strategy with respect to the Underlying Index when a replication strategy might be detrimental or disadvantageous to shareholders, such as when there are practical difficulties or substantial costs involved in compiling a portfolio of equity securities to replicate the Underlying Index, in instances in which a security in the Underlying Index becomes temporarily illiquid, unavailable or less liquid, or as a result of legal restrictions or limitations (such as tax diversification requirements) that apply to the Fund but not the Underlying Index,” according to the SEC filing.

The filing did not include an expense ratio, listing venue or ticker, indicating a launch is not imminent.

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