A fair number of
tracking the technology sector are not starved for attention and
a lot of that has to do with the large allocations to bellwether
tech names such as Apple (NASDAQ:
) found within those funds.
However, a previously vilified tech ETF with scant Apple
exposure has turned in an impressive 2012 performance. That fund
is the First Trust ISE Cloud Computing Index Fund (NASDAQ:
). When SKYY debuted in July 2011, the ETF
had its share of critics
, some of which questioned the validity of such a narrowly
Out of the gate, SKYY proved those critics correct, tumbling
from a debut price of $20 to $16. It appears SKYY is having the
last laugh as the fund has jumped 16.5 percent year-to-date. As
Street One Financial points out in a research note, SKYY is home
to 42 stocks and uses and equal-weight methodology.
Yes, Apple is included in SKYY's lineup, but with a weight of
just 2.07 percent, the stock is the ETF's 25th-largest holding. A
sampling of the names that figure more prominently in SKYY's
lineup include Rackspace (NYSE:
), Netflix (NASDAQ:
), Amazon (NASDAQ:
) and Google (NASDAQ:
The exposure to cloud plays such as Google and Netflix lends
SKYY to being a play on the booming smartphone industry as
"Users of smartphones no doubt have figured out that the
stability and usability of their 'apps' depends on network/server
conditions, and 'cloud' based programs such as 'Google Play' and
'Netflix Streaming' have become increasingly popular among
users," according to Street One.
SKYY has proven detractors wrong on another front, that being
its ability to attract assets. The ETF's
AUM total has swelled by more than 25 percent
in the past year and now stands at almost $76 million.
The asset growth has come quietly as has SKYY's impressive
year-to-date performance. Quiet or not, it is worth noting that
SKYY has sharply outperformed the Technology Select Sector SPDR
), the Vanguard Information Technology ETF (NYSE:
) and the iShares Dow Jones U.S. Technology Sector Index Fund
) this year. Those ETFs have an average allocation of 19.4
percent to Apple, indicating SKYY has not needed the iPad maker
to drive its returns in 2012.
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