Is WisdomTree Cloud Computing ETF (WCLD) a Strong ETF Right Now?
A smart beta exchange traded fund, the WisdomTree Cloud Computing ETF (WCLD) debuted on 09/06/2019, and offers broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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
The fund is sponsored by Wisdomtree. It has amassed assets over $645.17 million, making it one of the larger ETFs in the Technology ETFs. Before fees and expenses, this particular fund seeks to match the performance of the BVP NASDAQ EMERGING CLOUD INDEX .
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.
Annual operating expenses for WCLD are 0.45%, which makes 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.
Representing 86.50% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Financials and Telecom round out the top three.
When you look at individual holdings, Squarespace Inc - Class A (SQSP) accounts for about 2.07% of the fund's total assets, followed by Momentive Global Inc (MNTV) and Asana Inc - Cl A (ASAN).
The top 10 holdings account for about 17.79% of total assets under management.
Performance and Risk
So far this year, WCLD has gained about 19.54%, and is up roughly 6.50% in the last one year (as of 09/21/2023). During this past 52-week period, the fund has traded between $22.93 and $34.49.
WCLD has a beta of 1.08 and standard deviation of 41.55% for the trailing three-year period. With about 70 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 $547.76 million in assets, First Trust Cloud Computing ETF has $2.72 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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WisdomTree Cloud Computing ETF (WCLD): ETF Research Reports
First Trust Cloud Computing ETF (SKYY): ETF Research Reports
Global X Cloud Computing ETF (CLOU): ETF Research Reports
Asana, Inc. (ASAN) : Free Stock Analysis Report
Squarespace, Inc. (SQSP) : Free Stock Analysis Report
