Cloud ETFs provide diversified exposure to the high-performing technology and cloud computing sectors, mitigating single-stock risk with a broad portfolio of companies in this rapidly growing industry.

As cloud computing continues its rapid expansion, leading ETFs such as Global X Cloud Computing ETF Global X Cloud Computing ETF (CLOU), WisdomTree Cloud Computing Fund (WCLD), and First Trust Cloud Computing ETF (SKYY) present excellent long-term growth opportunities.

The long-term outlook for the cloud sector is highly promising, driven by an increasing focus on cloud AI, data security, and RAG services to enhance generative AI accuracy, fostering innovation and competitiveness. Global public cloud spending is projected to grow 20.4%, reaching $675.40 billion in 2024, underscoring businesses’ reliance on navigating data ownership and security challenges.

Likewise, the cloud computing market is on track to reach $945 billion by 2025, presenting significant long-term growth opportunities. To capitalize on this momentum, turning to cloud computing ETFs could be a wise choice, as they provide diversified, tax-efficient investments while minimizing company-specific risks.

Furthermore, these ETFs also offer varied expense ratios and indexes, ensuring broad diversification within the cloud computing sector. Given this favorable backdrop, let’s evaluate the three Technology Equities ETFs picks, starting with number three.

ETF #3: Global X Cloud Computing ETF Global X Cloud Computing ETF (CLOU)

CLOU is an exchange-traded fund launched and managed by Global X Management Company LLC. It invests in the public equity markets globally. The fund invests in stocks of companies in “SaaS,” “PaaS,” “IaaS,” managed server storage, data center “REITs,” and cloud and edge computing infrastructure, focusing on both growth and value stocks across diverse market capitalizations. It seeks to track the performance of the Indxx Global Cloud Computing Index using a full replication technique.

With $361.60 million in assets under management (AUM), CLOU’s top holding Snowflake, Inc. (SNOW) with a 4.79% weighting, followed by Shopify, Inc. (SHOP), with a 4.76% weighting, and Twilio, Inc. (TWLO), with 4.63%. It has a total of 38 holdings.

It has an expense ratio of 0.68%, higher than the category average of 0.58%. It currently has a NAV of $24.65. CLOU’s fund outflows were $14 million over the past month.

CLOU has gained 20.6% over the past three months and 29% over the past six months to close the last trading session at $24.63.

CLOU’s POWR Ratings reflect this promising outlook. The ETF’s overall A rating equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

CLOU has an A grade for Buy & Hold and Trade. Of the 119 ETFs in the A-rated Technology Equities ETFs group, it is ranked #40. Click here to access all of CLOU’s POWR Ratings.

ETF #2: WisdomTree Cloud Computing Fund (WCLD)

WCLD is an exchange-traded fund launched by WisdomTree, Inc. The fund is co-managed by Mellon Investments Corporation and WisdomTree Asset Management, Inc. The fund invests in global public equity markets, targeting stocks of companies in the cloud computing sectors. It focuses on both growth and value stocks across various market capitalizations and includes socially conscious companies promoting environmental responsibility. WCLD seeks to track the performance of the BVP Nasdaq Emerging Cloud Index using a representative sampling technique.

With $508 million in AUM, the fund has a total of 65 holdings. WCLD’s top holding is TWLO with a 2.26% weighting, followed by BILL Holdings, Inc. (BILL), with a 2.20% weighting, and Atlassian Corp. (TEAM) with 2.08%.

WCLD has an expense ratio of 0.45%, lower than the category average of 0.58%. It currently has a NAV of $38.99. Its fund inflows came in at $23.04 million over the past month.

WCLD has gained 29.1% over the past six months and 22.1% over the past three months to close the last trading session at $38.96.

WCLD’s strong outlook is reflected in its POWR Ratings. The ETF has an overall rating of A, translating to a Strong Buy in our proprietary rating system.

It has an A grade for Buy & Hold and Trade. It is ranked #34 in the same group. To access all the POWR Ratings for WCLD, click here.

ETF #1: First Trust Cloud Computing ETF (SKYY)

SKYY is an exchange-traded fund launched and managed by First Trust Advisors LP. The fund invests in public equity markets, targeting companies in information technology, software, IT and internet services, infrastructure, data management, storage, hardware, and platforms for software creation via virtualization or middleware delivered online. It invests in both growth and value stocks across diversified market capitalizations and seeks to track the performance of the ISE CTA Cloud Computing Index using a full replication technique.

With $3.74 billion in AUM, the fund has a total of 62 holdings. SKYY’s top holding is Pure Storage, Inc. (PSTG), with a 4.66% weighting, followed by Alphabet Inc. (GOOGL), with a 4.43% weighting, and Arista Networks, Inc. (ANET) with 4.31%.

SKYY has an expense ratio of 0.60%, higher than the category average of 0.58%. It currently has a NAV of $123.88. Its fund outflows came in at $160.54 million over the past three months.

SKYY has gained 34.7% over the past six months and 40.5% over the past year to close the last trading session at $123.78.

SKYY’s strong outlook is reflected in its POWR Ratings. The ETF has an overall rating of A, translating to a Strong Buy in our proprietary rating system.

It has an A grade for Buy & Hold and Trade. It is ranked #13 in the Technology Equities ETFs group. To access all the POWR Ratings for SKYY, click here.

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SKYY shares were trading at $123.88 per share on Thursday afternoon, up $0.10 (+0.08%). Year-to-date, SKYY has gained 41.30%, versus a 28.10% rise in the benchmark S&P 500 index during the same period.

About the Author: Abhishek Bhuyan

Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments. More...

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