In a signal that some investors believe cloud computing is here to stay, an ETF (Exchange Traded Fund) was launched to invest solely in cloud computing stocks. The fund is managed by First Trust Advisors and it will go by the ticker symbol of SKYY and it is trading on NASDAQ.
The fund does not provide a pure cloud computing investment. It holds 40 individual stocks and will follow a philosophy of investing in many companies that derive a relatively small percent of their revenue from cloud computing. Of course, it would be impossible to build a fund of any size with only pure play cloud computing stocks. Most pure play cloud companies are years away from an IPO.
Still, First Trust has not set the bar very high for considering stocks suitable for the fund. It will consider companies with market caps of at least $100M. But at this point, the list of holdings may resemble companies that are only testing the cloud waters, rather than living in them. Netflix and Amazon are 2 of the largest holdings.
First Trust Advisors SKYY ETF Top 10 Holdings (as of 7/11/2011)
|TIBCO Software Inc.||3.76|
|Aruba Networks, Inc.||3.67|
|Open Text Corporation||3.53|
The fund is looking at the cloud market as three sectors, for the purposes of evaluating stocks to include. This is how First Trust explains its view of the market.
Pure Play Cloud Computing Companies: Companies that are direct service providers for “the cloud” (network hardware/software, storage, cloud computing services) or companies that deliver goods and services that utilize cloud computing technology.
Non Pure Play Cloud Computing Companies: Companies that focus outside the cloud computing space but provide goods and services in support of the cloud computing space.
Technology Conglomerate Cloud Computing Companies: Large broad-based companies that indirectly utilize or support the use of cloud computing technology.
For more information, see the First Trust website