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Suppose the Covid-19 revealed anything to the world is that with current technology, remote working is no longer a thing of the future but the reality of our lives. With schools, offices, restaurants, and cessation of movement dictating how the globe interacts, cloud computing soared in 2021 to close the year with a valuation of $445.3 billion.
The pandemic has forever changed how people and organizations interact, and as a result of the increased appetite not only for remote working but augmented and virtual reality, cloud computing is expected to grow at a CAGR of 18.8%, with the valuation in 2030 expected to be upwards of $1.5 trillion. This growth projection means this is an investable disruptive corner of the tech industry with the potential for sky-high earnings.
The problem with such equities is being able to tell with certainty which cloud stocks will thrive. For this reason, the following three ETFs give you diversification across the cloud space and a chance to play the entire niche for maximum gains.
What is the composition of cloud ETFs?
Cloud computing utilizes remote servers and shared resources to achieve distributed storage, processing, managing, and data delivery. Therefore, cloud ETFs comprise equities that operate in the three cloud computing segments; infrastructure as a service, platform as a service, and software as a service.
The best cloud ETFs to invest and earn globally in 2022
The cost efficiencies and globalization of the world into a village have resulted in the accelerated adoption of cloud computing by organizations making this tech niche attractively valued with massive potential for growth and earnings. Having continuously proved themselves as a revenue generator among the current disruptive technologies in the technology sector, these three cloud ETFs can revolutionize your portfolio.
№ 1. First Trust Cloud Computing ETF (SKYY)
Price: $85.00
Expense ratio: 0.60%
Annual dividend yield: 0.15%
SKYY chart
The First Trust Cloud Computing ETF tracks the performance of the ISE CTA Cloud Computing Index TM, exposing investors to global cloud computing equities. It invests at least 90% of its total assets in the tracked index underlying holdings and depository receipts making up the composite index.
In a list of 115 technology funds, the SKYY ETF is ranked № 22 for long-term investing.
The top three holdings of this non-diversified ETF are:
- Pure Storage, Inc. Class A – 4.18%
- Arista Networks, Inc. – 3.72%
- Oracle Corporation – 3.71%
The SKYY ETF has $5.16 billion in assets under management, at an expense ratio of 0.60%. Combining pureplay cloud computing equities with blue-chip equities in the cloud computing space but deriving significant revenues from other verticals results in a pretty focused fund with enough diversity to withstand market downturns.
The combination of blue-chip and small-capitalization equities also ensures alpha creation and amplified returns; 5-year returns of 129.75%, 3-year returns of 47.50%, and 1-year returns of -13.96%.
№ 2. Global X Cloud Computing ETF (CLOU)
Price: $21.00
Expense ratio: 0.68%
Annual dividend yield: N/A
CLOU chart
The Global X Cloud Computing ETF tracks the yield and price performance of the Global Cloud Computing Index, net of expenses and fees. It invests at least 80% of its total assets in the tracked index underlying holdings, in addition to ADRs and GDRs based on the tracked index. It exposes investors to organizations that benefit the most from the adoption of cloud computing.
In a list of 115 technology funds, the SKYY ETF is ranked № 20 for long-term investing.
The top three holdings of this non-diversified ETF are:
- Akamai Technologies, Inc. – 6.45%
- Anaplan, Inc. – 5.93%
- Qualys, Inc. – 5.31%
The CLOU ETF has $909.3 million in assets under management, with an expense ratio of 0.68%. Equities of companies earning more than $500 million are capped at 10% of the total fund’s weight, while the rest have to generate at least 50% of their earnings from cloud computing. Having a hand in all cloud computing verticals means investors are in the money, whichever benefits. This ETF is yet to post positive results, but as cloud computing adoption accelerates, buying this deep might prove a stroke of genius.
№ 3. Simplify Volt Cloud and Cybersecurity Disruption Fund (VCLO)
Price: $11.50
Expense ratio: 0.95%
Annual dividend yield: N/A
VCLO chart
Everyone who has been in the market long enough to have significant experience will tell you that picking stocks to beat the market is futility. However, there exist actively managed ETFs that pick equities they believe will outperform the market and pool them together. In the cloud computing space, it is the Simplify Volt Cloud and Cybersecurity Disruption Fund. It is an actively managed fund seeking long-term capital growth by investing at least 80% of its total assets in securities, facilitating the cloud computing and cybersecurity niches.
The top three holdings of this global cloud computing fund are:
- CrowdStrike Holdings, Inc. Class A – 14.15%
- Cloudflare Inc Class A – 11.56%
- Datadog Inc Class A – 10.26%
The VCLO ETF has $12.5 million in assets under management, at an expense ratio of 0.95%. Given the need for cybersecurity services and the expected cloud computing organization, this ETF will make significant bullish moves. Despite the top three equities accounting for 35.97%, this fund has already shown it can withstand market downturn by launching during the coronavirus pandemic and posting positive returns-a pretty elite group, 1-year returns of 15.85%.
Final thoughts
Cloud computing provides organizations with scalability, ease of access, flexibility, agility, disaster recovery, and energy efficiency. Its adoption brings the same benefits to government agencies, making it a disruptive technology beneficial to all sectors of the economy. With experts forecasting the migration of IT solutions to upwards of 50% by 2024, the three cloud computing funds above provide an opportunity for significant earnings globally.
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