Market Overview

Netflix Surge Helps a Surprising ETF

Shares of Netflix (NASDAQ: NFLX) are up more than 24 percent Tuesday after the company said it added more than three million subscribers in the first quarter. California-based Netflix forecast second-quarter EPS of 23 to 48 cents with analysts expecting 29 cents.

After Netflix was booted from the Nasdaq 100 several months ago, the stock's already arguably small representation in ETFs took a hit. However, one surprising ETF is getting a bit of a Netflix bounce Tuesday.

That ETF is the First Trust ISE Cloud Computing Index Fund (NYSE: SKYY), which is up almost 2.8 percent, albeit on light volume. While Netflix may not be the first company analysts and investors think of when they think cloud computing, the First Trust ISE Cloud Computing Index Fund is the one ETF that offers somewhat decent exposure to the stock.

Netflix is SKYY's second-largest holding with a weight of 5.4 percent. Oracle is the ETF's largest holding with an allocation of almost 7.1 percent.

Home to 40 stocks in all, SKYY will celebrate its second birthday in early July. The ETF was met with the usual criticism that comes with hyper-focused sector ETFs when it debuted, but SKYY has been a decent performer gaining seven percent in the six months leading up to Tuesday.

Year-to-date, SKYY's underlying index, the ISE Cloud Computing Index, has outperformed the S&P 1500 Information Technology Index by 180 basis points, according to First Trust data.

So SKYY may not be the first ETF investors look to for Netflix exposure, but it is the most credible option at this point. Only the PowerShares NASDAQ Internet Portfolio (NASDAQ: PNQI) comes close to rivaling SKYY in terms of Netflix exposure and in the case of PNQI, "close" means a 3.7 weight to the stock.

SKYY charges an annual expense ratio of 0.6 percent and has $86.7 million in assets. Other top-10 holdings in the ETF include Google (NASDAQ: GOOG), Hewlett-Packard (NYSE: HPQ) and Amazon (NASDAQ: AMZN).

For more on ETFs, click here.

Posted-In: Earnings Long Ideas News Sector ETFs Guidance Short Ideas Hot Intraday Update Best of Benzinga

 

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