Covid-19 is Bringing About Opportunities in Cloud Computing ETFs
The rise of cloud computing has never been more apparent amid the Covid-19 pandemic. With social distancing measures in place, a lot of businesses have their heads in the clouds—that is, using cloud computing as a primary way to run their core businesses—something that will benefit cloud computing exchange-traded funds (ETFs).
“The emergence of the COVID-19 pandemic earlier this year has changed everything, from how we live to how we work, and everything in between,” wrote Danny Vena in a Motley Fool article. “Remote work and videoconferencing have combined to cause a notable acceleration in the adoption of cloud computing, a trend that was already well underway.”
Case in point, cloud computing has become such an integral part of Amazon’s business model—namely their Amazon Web Services (AWS).
“When the discussion turns to the cloud, Amazon, with its Amazon Web Services (AWS), invariably dominates the conversation as the pioneer and still the leader in the space,” the article added. “There’s little doubt it remains a great place for investors to cut their teeth on the cloud computing revolution, as revenue from AWS grew more than 36% in 2019. Yet the opportunities don’t stop there, as cloud computing refers to a whole range of software and services that can be provided remotely. And this massive multiyear digital transformation is just getting started.”
Keeping ETF Investors’ Heads in the Clouds
The impact of cloud computing can be felt as more companies are utilizing the technology at a rapid pace to power their core businesses. That’s why Global X ETFs, the New York-based provider of exchange-traded funds, recently launched the Global X Cloud Computing ETF (Nasdaq: CLOU).
Seeking to track the Indxx Global Cloud Computing Index, the fund holds a basket of companies that potentially stand to benefit from the continuing proliferation of cloud computing technology and services. The cloud computing industry refers to companies that (i) license and deliver software over the internet on a subscription basis (SaaS), (ii) provide a platform for creating software applications which are delivered over the internet (PaaS), (iii) provide virtualized computing infrastructure over the internet (IaaS), (iv) own and manage facilities customers use to store data and servers, including data center Real Estate Investment Trusts (REITs), and/or (v) manufacture or distribute infrastructure and/or hardware components used in cloud and edge computing activities.
Another fund to consider is the WisdomTree Cloud Computing Fund (WCLD). The fund seeks to track the price and yield performance of the BVP Nasdaq Emerging Cloud Index, which is designed to track the performance of emerging public companies primarily involved in providing cloud computing software and services to their customers. It is non-diversified.