Market Overview

Another Cloud Computing ETF Arrives And It's Less Expensive Than Rivals

Another Cloud Computing ETF Arrives And It's Less Expensive Than Rivals

And then there were three.

Three cloud computing exchange traded funds that is. That group of ETFs grew by one with Friday's debut of the WisdomTree Cloud Computing Fund (NASDAQ: WCLD).

What Happened

The latest entrant to the cloud ETF fray tracks the BVP Nasdaq Emerging Cloud Index, which is equally weighted Index designed to measure the performance of emerging public companies focused on delivering cloud-based software to customers,” according to WisdomTree.

WCLD's underlying index has returned nearly 39% since the start of 2019. That's double the performance of the First Trust Cloud Computing ETF (NASDAQ: SKYY), the oldest of the three cloud computing ETFs.

Why It's Important

Like its older rivals, WCLD is a play on a the fast-growing cloud universe and data support that impressive growth trajectory.

“As the world becomes increasingly more digital and connected, the global cloud computing market has grown exponentially and is projected to total nearly $697 billion by 2025,” said WisdomTree Global Head of Research Jeremy Schwartz in a statement. “The WisdomTree Cloud Computing Fund (WCLD) provides investors with a focused approach to selecting emerging cloud companies and scales the unique expertise of Nasdaq and Bessemer Venture Partners in identifying these companies.”

WCLD holds 50 stocks, none of which exceed weights of 2.62%. The new ETF's holdings include Box, Inc. (NYSE: BOX), DocuSign (NASDAQ: DOCU) and Dropbox (NYSE: DBX).

“WCLD targets cloud computing businesses, which we believe are best positioned for high levels of recurring revenue growth and have the potential to scale at a faster rate than traditional tech companies,” said Schwartz. “Cloud-based businesses typically have better profit margins and higher growth than other tech companies.”

What's Next

It remains to be seen if WCLD will be a success, but it has one big advantage over its rivals: a lower fee. The new WisdomTree ETF charges just 0.45% per year, or $45 on a $10,000 investment. That's lower than the 0.60% charged by SKYY and well below the 0.68% on the Global X Cloud Computing ETF (NASDAQ: CLOU).

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