Cloud computing thrived during a pandemic-ridden 2020, and that strength is expected to continue, making it a premier option for investors looking to diversify their portfolio with ETFs like the Global X Cloud Computing ETF (CLOU).
“One fast-growing segment of the tech sector that has proven itself out in recent years, however, involves cloud computing stocks that have revolutionized how we interact with data,” a U.S. News report said.
“It used to be you had to have enough memory on your phone to store pictures and songs, or enough server space in the office to keep all your company’s emails and files,” the report added. “Not only is that no longer the case, but saving data to the cloud allows you to access that information instantly from anywhere – and with much less upfront investment.”
CLOU seeks 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. CLOU gives ETF investors:
- High Growth Potential: CLOU enables investors to access high growth potential through companies that are positioned to benefit from the increased adoption of cloud computing technology.
- An Unconstrained Approach: CLOU’s composition transcends classic sector, industry, and geographic classifications by tracking an emerging theme.
- ETF Efficiency: In a single trade, CLOU delivers access to dozens of companies with high exposure to the cloud computing theme.
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.
Focused CLOU Holdings
Certain ETF strategies may involve interspersing a number of stocks in order to provide diversification. CLOU chooses to double down on select companies.
“It has a much more focused list of holdings, however, with fewer than 40 total positions at present,” the U.S. News report noted. “The portfolio is relatively equally spread out across this shorter list, with no single position worth more than about 5% of the fund’s total right now. Top holdings at present include cloud voice and text message provider Twilio (TWLO) and cloud-based cybersecurity firm Zscaler (ZS).”
“Shares of this cloud computing ETF have dipped slightly since their February highs, but they are still up more than 70% in the last 12 months,” the report added.
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