Should You Invest in the WisdomTree Cloud Computing ETF?

Designed to provide broad exposure to the Technology - Cloud Computing segment of the equity market, the WisdomTree Cloud Computing ETF WCLD is a passively managed exchange traded fund launched on 09/06/2019.

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

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 8, placing it in top 50%.

Index Details

The fund is sponsored by Wisdomtree. It has amassed assets over $399.90 million, making it one of the average sized ETFs attempting to match the performance of the Technology - Cloud Computing segment of the equity market. WCLD seeks to match the performance of the BVP NASDAQ EMERGING CLOUD INDEX before fees and expenses.

The BVP Nasdaq Emerging Cloud Index is an equally weighted Index, designed to measure the performance of emerging public companies focused on delivering cloud-based software to customers.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.45%, making it on par with most peer products in the space.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Information Technology sector--about 85.10% of the portfolio. Financials and Industrials round out the top three.

Looking at individual holdings, Q2 Holdings Inc QTWO accounts for about 2.82% of total assets, followed by Squarespace Inc - Class A SQSP and Wix.com Ltd WIX.

The top 10 holdings account for about 21.75% of total assets under management.

Performance and Risk

So far this year, WCLD has lost about -11.13%, and is down about -0.06% in the last one year (as of 09/16/2024). During this past 52-week period, the fund has traded between $26.89 and $37.05.

The ETF has a beta of 1.11 and standard deviation of 39.89% for the trailing three-year period. With about 68 holdings, it effectively diversifies company-specific risk.

Alternatives

WisdomTree 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, WCLD 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 First Trust Cloud Computing ETF SKYY tracks ISE Cloud Computing Index. Global X Cloud Computing ETF has $353.11 million in assets, First Trust Cloud Computing ETF has $2.90 billion. CLOU has an expense ratio of 0.68% and SKYY charges 0.60%.

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