The WisdomTree Cloud Computing ETF (WCLD) made its debut on 09/06/2019, and is a smart beta exchange traded fund that provides broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by Wisdomtree, WCLD has amassed assets over $552.46 million, making it one of the larger ETFs in the Technology ETFs. WCLD seeks to match the performance of the BVP NASDAQ EMERGING CLOUD INDEX before fees and expenses.
The BVP Nasdaq Emerging Cloud Index is an equally weighted Index, designed to measure the performance of emerging public companies focused on delivering cloud-based software to customers.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.45% for WCLD, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
WCLD's heaviest allocation is in the Information Technology sector, which is about 92.70% of the portfolio.
Taking into account individual holdings, Yext Inc (YEXT) accounts for about 2.28% of the fund's total assets, followed by Clearwater Analytics Hds-A (CWAN) and Workiva Inc (WK).
The top 10 holdings account for about 19.26% of total assets under management.
Performance and Risk
Year-to-date, the WisdomTree Cloud Computing ETF has lost about -4.11% so far, and is down about -48.41% over the last 12 months (as of 01/09/2023). WCLD has traded between $22.93 and $47.99 in this past 52-week period.
WCLD has a beta of 1.06 and standard deviation of 44.29% for the trailing three-year period. With about 75 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree Cloud Computing ETF is an excellent option for investors seeking to outperform the Technology ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Global X Cloud Computing ETF (CLOU) tracks INDXX GLOBAL CLOUD COMPUTING INDEX and the First Trust Cloud Computing ETF (SKYY) tracks ISE Cloud Computing Index. Global X Cloud Computing ETF has $533.67 million in assets, First Trust Cloud Computing ETF has $2.53 billion. CLOU has an expense ratio of 0.68% and SKYY charges 0.60%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Technology ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Get it free >>WisdomTree Cloud Computing ETF (WCLD): ETF Research Reports
Workiva Inc. (WK) : Free Stock Analysis Report
First Trust Cloud Computing ETF (SKYY): ETF Research Reports
Yext (YEXT) : Free Stock Analysis Report
Global X Cloud Computing ETF (CLOU): ETF Research Reports
Clearwater Analytics Holdings, Inc. (CWAN) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
