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Jim Woods, Part 3: A Cloud Tech ETF

05/08/2020 5:00 am EST

Focus: ETFS

Jim Woods

Editor, Successful Investing, Intelligence Report

Many investors has pivoted towards stocks and sectors that are doing well, despite the economic shutdown, notes ETF expert Jim Woods, editor of The Deep Woods.

One such sector potentially could be cloud computing, especially since the coronavirus has shifted more and more white-collar work away from the offices and toward long-distance teleworking.

Cloud computing software, including Microsoft’s Azure platform and Google’s Google Drive, help make teleworking feasible by providing employees with access to their work for sharing with their colleagues as never before.

(Editor's note: Jim Woods will be participating in the MoneyShow Virtual Event. On Wednesday, May 13th, Jim will be discussing "How to Always Know When to Sell Your Stocks". Register for FREE.)

The First Trust Cloud Computing ETF (SKYY) is an ETF that tracks an index of companies that are involved in the cloud computing industry. The stocks are ranked by infrastructure, platform and software. A company’s weight in the index is its score divided by the sum of all scores.

As a result, this ETF’s managers use no other screens and do not attempt to predict which cloud computing company is going to come out on top in the sector.

Some of this fund’s top holdings include Amazon (AMZN), Microsoft (MSFT), Alphabet Class A (GOOGL), Oracle (ORCL), Shopify Class A (SHOP), MongoDB Class A (MDB), Citrix Systems (CTXS) and Alibaba Group Holding Ltd. (BABA).

This fund’s performance has risen after the recent market downslide. The fund has amassed $2.86 billion in assets under management and has an expense ratio of 0.60%, meaning that it is more expensive to hold in comparison to many other exchange-traded funds.

In short, while SKYY does provide an investor with a chance to profit from the world of cloud computing, the sector may not be appropriate for all portfolios. Thus, interested investors always should conduct their due diligence and decide whether the fund is suitable for their investing goals.

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