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Best cloud ETFs to buy in 2022
With more cloud companies crowned unicorns every year, investors are optimistic that the appetite for strong cloud computing businesses will continue to grow. This beginners’ guide has selected the best of the current market for you to place the right investment.
What are the top cloud ETFs to buy?
Our analysts have selected five of the best cloud ETFs for this year as displayed in the table below. Continue scrolling further to learn more about each in turn.
|#||ETF symbol||ETF name|
|1||CLOU||Global X Cloud Computing ETF|
|2||WCLD||WisdomTree Cloud Computing ETF|
|3||VCLO||Simplify Volt Cloud and Cybersecurity Disruption ETF|
|4||SKYU||ProShares Ultra NASDAQ Cloud Computing ETF|
|5||SKYY||First Trust Cloud Computing ETF|
1. Global X Cloud Computing ETF (NASDAQ: CLOU)
CLOU is a fund that seeks to align with the performance and yield of the Indxx Global Cloud Computing Index. It has 35 holdings in global companies dedicated to benefits from the increased adoption of cloud computing technology. CLOU has grown steadily since its inception and provided periods of high returns to its investors.
New investors interested in CLOU should note that the fund’s top 10 holdings comprise over 40% of its net assets, making them pivotal to the fund’s performance. They should also bear in mind that despite an intended global focus, 85% of the fund’s holdings are US-based companies. Therefore, there are potential niche specific-holding and geographical market risks you must evaluate before investing in the fund.
2. WisdomTree Cloud Computing ETF (NASDAQGM: WCLD)
WCLD is a fund that corresponds with the BVP Nasdaq Emerging Cloud Index. It is an ideal investment for gaining exposure to emerging and disruptive US companies that are focused on cloud software and services. You should invest in WCLD if you are interested in tapping into some of the most disruptive companies in the world.
The fund has 59 holdings in mostly large to mid sized companies, this entails that it poses a slightly lower margin of risk in this space as its holdings are sizable. Furthermore, its net assets are relatively evenly spread across its holdings, reducing specific-holding risk. As such, cloud investors with lower than average risk appetites should consider adding WCLD to their portfolio.
3. Simplify Volt Cloud and Cybersecurity Disruption ETF (NYSEARCA: VCLO)
VCLO is a fund that seeks to provide capital appreciation through its holdings in both company stocks and financial options. The fund is actively-managed and has a thematic investment strategy: it invests in the most dynamic companies that are on the verge of dominating the new era of cloud, while bolstering the exposure with options contracts.
This is a high-risk and high-reward fund, ideally suited for more seasoned investors that have an acute understanding of market volatility. Investing in speculative growth with options calls is a very technical investment strategy and it may not always provide consistent returns. You must do your own risk assessment and due diligence before adding VCLO to your portfolio.
4. ProShares Ultra NASDAQ Cloud Computing ETF (NASDAQGM: SKYU)
SKYU is a fund that aims to correspond with two times the daily performance of the ISE CTA Cloud Computing Index. Its holdings are in companies classified as cloud computing and companies that are engaged in infrastructure-as-a-service, platform-as-a-service, and software-as-a-service.
Its top 10 holdings include sector giants: Alphabet, Microsoft, Amazon, and Alibaba. New investors can be assured that well-reputed companies mean lower risk of investment. SKYU is appealing with its ambitious goals of return and if interested, you should weigh its addition against the balance of your portfolio.
5. First Trust Cloud Computing ETF (NASDAQGM: SKYY)
SKYY is a fund that reflects the price and yield of the ISE CTA Cloud Computing Index. Its 69 holdings are companies that deliver cloud computing services, provide platforms for cloud computing services, and develop software for cloud computing services. It must be noted that the fund is very similar to the aforementioned ETF, SKYU.
Both ETFs track the ISE CTA Cloud Computing Index and both ETFs have reputed sector giants in their holdings. The main difference is that SKYU poses slightly more risk as it aims to yield twice the daily performance of the index. Investors should therefore consider either SKYU or SKYY based on their particular risk appetite.
Where to buy the best cloud ETFs
Registering with an online broker is key for investing in an ETF. ETFs are like individual stocks, you can buy or sell them as you wish. The table below features our preference of the best brokers that offer cloud ETFs.
What is a cloud ETF?
It’s an exchange traded fund that holds shares in companies trading within the cloud industry. Cloud ETFs provide investors with affordable exposure to this disruptive industry as compared to other options. These funds normally hold growth stocks, but cloud computing tends to deliver even higher returns than broad growth equity benchmarks.
These ETFs are ideal for investors that have a future outlook. As most growth companies are speculative investments, you have to decide your budget according to money that you can afford to lose when you invest in the cloud sector. Recall that there is always high risk tied in with the potential of high reward.
Are cloud ETFs a good investment?
Yes, as you can stand to gain high returns from investing in cloud ETFs. With an industry valuation that is greater than the individual Gross Domestic Products of 87% of the world’s countries, Nearly every company in the cloud industry is worth over a billion USD, and the current valuation for the industry stands at over 500 billion USD.
Cloud ETFs hold growth stocks and these companies are prone to volatility. They are expected to be worth billions of dollars someday, but more often than not, the journey to that valuation has several market speed bumps in price due to several factors beyond your control (i.e. periods of inconsistent company growth, interest rates, etc).
Therefore, with the right cloud ETF, it often takes being patient and having diamond hands to see a return in your investment. You must do your due diligence and actively stay updated on the movements in the market. To help you best place your investment, we have provided the necessary resources and news about cloud ETFs in the links below.
Latest airline ETF news
S&P 500 falls again as bears push stocks toward another losing week
Expert opinion: JPMorgan stock down 30% isn’t ‘that appealing’
Bill Nygren gives away his favourite financial stock
TJX stock rises by 10% after announcing its financial results for Q1 2023
Piper Sandler: S&P 500 index is yet to find a tradeable bottom
Major Tesla shareholder demands $15 billion stock buyback
Fact-checking & references
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