If you're interested in broad exposure to the Technology - Cloud Computing segment of the equity market, look no further than the First Trust Cloud Computing ETF (SKYY), a passively managed exchange traded fund launched on May 27, 2011.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Cloud Computing is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 3, placing it in top 19%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $3.43 billion, making it one of the larger ETFs attempting to match the performance of the Technology - Cloud Computing segment of the equity market. SKYY 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.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.6%, making it on par with most peer products in the space.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector -- about 83.2% of the portfolio. Telecom and Consumer Discretionary round out the top three.
Looking at individual holdings, Oracle Corporation (ORCL) accounts for about 4.84% of total assets, followed by Pure Storage, Inc. (class A) (PSTG) and Alphabet Inc. (class A) (GOOGL).
The top 10 holdings account for about 39.11% of total assets under management.
Performance and Risk
The ETF has gained about 20.43% and is up roughly 33.61% so far this year and in the past one year (as of 11/04/2025), respectively. SKYY has traded between $89.46 and $143.46 during this last 52-week period.
The ETF has a beta of 1.24 and standard deviation of 26.74% for the trailing three-year period, making it a medium risk choice in the space. With about 65 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Cloud Computing ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SKYY is an outstanding 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 WisdomTree Cloud Computing ETF (WCLD) tracks BVP NASDAQ EMERGING CLOUD INDEX. Global X Cloud Computing ETF has $296.62 million in assets, WisdomTree Cloud Computing ETF has $309.04 million. CLOU has an expense ratio of 0.68%, and WCLD charges 0.45%.
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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First Trust Cloud Computing ETF (SKYY): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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