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Should You Invest in the WisdomTree Cloud Computing ETF (WCLD)?

·3 min read

Designed to provide broad exposure to the Technology - Cloud Computing segment of the equity market, the WisdomTree Cloud Computing ETF (WCLD) is a passively managed exchange traded fund launched on 09/06/2019.

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. 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 Wisdomtree. It has amassed assets over $619.86 million, making it one of the larger ETFs attempting to match the performance of the Technology - Cloud Computing segment of the equity market. WCLD seeks to match the performance of the BVP NASDAQ EMERGING CLOUD INDEX before fees and expenses.

The BVP Nasdaq Emerging Cloud Index is an equally weighted Index, designed to measure the performance of emerging public companies focused on delivering cloud-based software to customers.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.45%, making it one of the cheaper products in the space.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Information Technology sector--about 91.60% of the portfolio.

Looking at individual holdings, Tenable Holdings Inc (TENB) accounts for about 1.64% of total assets, followed by Sprout Social Inc - Class A (SPT) and Agora Inc-Adr (API).

The top 10 holdings account for about 15.54% of total assets under management.

Performance and Risk

The ETF has lost about -45.40% and is down about -49.88% so far this year and in the past one year (as of 06/23/2022), respectively. WCLD has traded between $25.93 and $65.33 during this last 52-week period.

The ETF has a beta of 1.27 and standard deviation of 40.89% for the trailing three-year period. With about 76 holdings, it effectively diversifies company-specific risk.

Alternatives

WisdomTree 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, WCLD is a great 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.

Global X Cloud Computing ETF (CLOU) tracks INDXX GLOBAL CLOUD COMPUTING INDEX and the First Trust Cloud Computing ETF (SKYY) tracks ISE Cloud Computing Index. Global X Cloud Computing ETF has $635.63 million in assets, First Trust Cloud Computing ETF has $3.45 billion. CLOU has an expense ratio of 0.68% 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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