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Is First Trust Cloud Computing ETF (SKYY) a Strong ETF Right Now?
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Launched on 05/27/2011, the First Trust Cloud Computing ETF (SKYY - Free Report) is a smart beta exchange traded fund offering broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
SKYY is managed by First Trust Advisors, and this fund has amassed over $2.59 billion, which makes it one of the larger ETFs in the Technology ETFs. This particular fund seeks to match the performance of the ISE Cloud Computing Index before fees and expenses.
The 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.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for this ETF are 0.60%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.23%.
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.
For SKYY, it has heaviest allocation in the Information Technology sector --about 85.60% of the portfolio --while Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Mongodb, Inc. (MDB - Free Report) accounts for about 4% of total assets, followed by Pure Storage, Inc. (class A) (PSTG - Free Report) and Arista Networks, Inc. (ANET - Free Report) .
SKYY's top 10 holdings account for about 34.21% of its total assets under management.
Performance and Risk
The ETF has lost about -44.19% so far this year and is down about -45.26% in the last one year (as of 01/02/2023). In the past 52-week period, it has traded between $55.50 and $103.46.
The fund has a beta of 1.02 and standard deviation of 35.14% for the trailing three-year period, which makes SKYY a medium risk choice in this particular space. With about 71 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Cloud Computing ETF is an excellent option for investors seeking to outperform the Technology ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Global X Cloud Computing ETF (CLOU - Free Report) tracks INDXX GLOBAL CLOUD COMPUTING INDEX and the WisdomTree Cloud Computing ETF (WCLD - Free Report) tracks BVP NASDAQ EMERGING CLOUD INDEX. Global X Cloud Computing ETF has $540.05 million in assets, WisdomTree Cloud Computing ETF has $573.08 million. CLOU has an expense ratio of 0.68% and WCLD charges 0.45%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Technology ETFs.
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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Is First Trust Cloud Computing ETF (SKYY) a Strong ETF Right Now?
Launched on 05/27/2011, the First Trust Cloud Computing ETF (SKYY - Free Report) is a smart beta exchange traded fund offering broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
SKYY is managed by First Trust Advisors, and this fund has amassed over $2.59 billion, which makes it one of the larger ETFs in the Technology ETFs. This particular fund seeks to match the performance of the ISE Cloud Computing Index before fees and expenses.
The 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.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for this ETF are 0.60%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.23%.
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.
For SKYY, it has heaviest allocation in the Information Technology sector --about 85.60% of the portfolio --while Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Mongodb, Inc. (MDB - Free Report) accounts for about 4% of total assets, followed by Pure Storage, Inc. (class A) (PSTG - Free Report) and Arista Networks, Inc. (ANET - Free Report) .
SKYY's top 10 holdings account for about 34.21% of its total assets under management.
Performance and Risk
The ETF has lost about -44.19% so far this year and is down about -45.26% in the last one year (as of 01/02/2023). In the past 52-week period, it has traded between $55.50 and $103.46.
The fund has a beta of 1.02 and standard deviation of 35.14% for the trailing three-year period, which makes SKYY a medium risk choice in this particular space. With about 71 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Cloud Computing ETF is an excellent option for investors seeking to outperform the Technology ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Global X Cloud Computing ETF (CLOU - Free Report) tracks INDXX GLOBAL CLOUD COMPUTING INDEX and the WisdomTree Cloud Computing ETF (WCLD - Free Report) tracks BVP NASDAQ EMERGING CLOUD INDEX. Global X Cloud Computing ETF has $540.05 million in assets, WisdomTree Cloud Computing ETF has $573.08 million. CLOU has an expense ratio of 0.68% and WCLD charges 0.45%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Technology ETFs.
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.