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Should You Invest in the Global X Cloud Computing ETF (CLOU)?

·3 min read

Looking for broad exposure to the Technology - Cloud Computing segment of the equity market? You should consider the Global X Cloud Computing ETF (CLOU), a passively managed exchange traded fund launched on 04/12/2019.

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Cloud Computing is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 10, placing it in bottom 38%.

Index Details

The fund is sponsored by Global X Management. It has amassed assets over $635.63 million, making it one of the larger ETFs attempting to match the performance of the Technology - Cloud Computing segment of the equity market. CLOU seeks to match the performance of the INDXX GLOBAL CLOUD COMPUTING INDEX before fees and expenses.

The Indxx Global Cloud Computing Index provides exposure to exchange-listed companies in developed and emerging markets that are positioned to benefit from the increased adoption of cloud computing technology.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.68%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 2.82%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, Akamai Technologies Inc (AKAM) accounts for about 6.18% of total assets, followed by Mimecast Ltd (MIME) and Qualys Inc (QLYS).

The top 10 holdings account for about 48.54% of total assets under management.

Performance and Risk

The ETF has lost about -37.42% and is down about -39.97% so far this year and in the past one year (as of 06/23/2022), respectively. CLOU has traded between $15.63 and $32.14 during this last 52-week period.

The ETF has a beta of 1.07 and standard deviation of 32.42% for the trailing three-year period. With about 35 holdings, it has more concentrated exposure than peers.

Alternatives

Global X Cloud Computing ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, CLOU is an outstanding option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

WisdomTree Cloud Computing ETF (WCLD) tracks BVP NASDAQ EMERGING CLOUD INDEX and the First Trust Cloud Computing ETF (SKYY) tracks ISE Cloud Computing Index. WisdomTree Cloud Computing ETF has $619.86 million in assets, First Trust Cloud Computing ETF has $3.45 billion. WCLD has an expense ratio of 0.45% and SKYY charges 0.60%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.


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