Is WisdomTree Cloud Computing ETF (WCLD) a Strong ETF Right Now?
Smart Beta ETF report for WCLD
Launched on 09/06/2019, the WisdomTree Cloud Computing ETF (WCLD) is a smart beta exchange traded fund offering broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $1.22 billion, this makes it one of the average sized ETFs in the Technology ETFs. WCLD is managed by Wisdomtree. 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.45% for WCLD, making it one of the cheaper products in the space.
WCLD's 12-month trailing dividend yield is 0%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector - about 95.60% of the portfolio.
Taking into account individual holdings, Asana Inc - Cl A (ASAN) accounts for about 2.83% of the fund's total assets, followed by Cloudflare Inc - Class A (NET) and Bill.com Holdings Inc (BILL).
The top 10 holdings account for about 21.43% of total assets under management.
Performance and Risk
The ETF has added roughly 0.91% and is down about -5.40% so far this year and in the past one year (as of 12/24/2021), respectively. WCLD has traded between $44.50 and $65.33 during this last 52-week period.
The ETF has a beta of 1.16 and standard deviation of 35.68% for the trailing three-year period. With about 58 holdings, it effectively diversifies company-specific risk.
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 $1.26 billion in assets, First Trust Cloud Computing ETF has $6.22 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.
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
Cloudflare, Inc. (NET): Free Stock Analysis Report
Bill.com Holdings, Inc. (BILL): Free Stock Analysis Report
Asana, Inc. (ASAN): Free Stock Analysis Report
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