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Cloud Computing ETFs: Reasons to Bet On

Sanghamitra Saha

Cloud computing is a process in which data or software is stored outside of a computer, but can be easily accessed anywhere, at any time via the Internet. This idea is effective as it helps firms lower IT costs by eliminating the need for servers and related maintenance costs.

Also, cloud computing provides greater accessibility. Since everything is on the Internet, users can access any data or document any moment. Needless to say, such advantages will surely give it an edge in the future.

Global investment in cloud services has increased leaps and bounds in recent years as more companies have opted online infrastructure provided by the likes of Amazon AMZN, Microsoft MSFT and Alphabet GOOGL.

Research firm Gartner expects, by the end of 2019, “more than 30% of technology providers' new software investments will have moved from cloud-first to cloud-only.” Though most organizations do not possess a formal cloud strategy still now, 70% of organizations will have by 2022, per Gartner.

In a report released in Apr 2019, Gartner projected that the worldwide public cloud services market will likely grow 17.5% in 2019 to total $214.3 billion, up from $182.4 billion in 2018. Currently about 19% of cloud budgets are disbursed on cloud-related services, such as cloud consulting, implementation, migration and managed services, and Gartner expects that this share of investment will rise to 28% by 2022.

Gartner also projects the market size and growth of the cloud services industry will be at around three time the growth of overall IT services through 2022 (read: Can Global X New Cloud Computing ETF See Success?).

Against this backdrop, below we highlight a few cloud computing ETFs that could stand to gain in the coming days (see all technology ETFs here).

First Trust Cloud Computing ETF (SKYY)

The underlying ISE Cloud Computing Index is a modified market capitalization weighted index designed to track the performance of companies actively involved in the cloud computing industry. The fund charges 60 bps in fees (read: ETFs to Tap on Oracle's Robust Q4 Earnings).

Tortoise Cloud Infrastructure Fund (TCLD)

The underlying Tortoise Global Cloud Infrastructure Index is a proprietary rules-based, modified market capitalization weighted, float adjusted index designed to track the overall performance of equity securities of global cloud computing infrastructure companies listed on a developed country exchange. Splunk, Oracle and Alibaba are the top three holdings of the fund. The fund charges 40 bps in fees (read: ETFs to Tap on Oracle's Robust Q4 Earnings).

AdvisorShares Sabretooth ETF (BKCH)

The fund holds that companies utilizing cloud computing and digital companies that implement emerging technology like blockchain may realize increased profitability and appreciation in stock prices over an extended time horizon. Mastercard, Alteryx and Visa are the top three holdings of the fund. The product charges 85 bps in fees.

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
 
Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
First Trust Cloud Computing ETF (SKYY): ETF Research Reports
 
Tortoise Cloud Infrastructure Fund (TCLD): ETF Research Reports
 
AdvisorShares Sabretooth ETF (BKCH): ETF Research Reports
 
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