WisdomTree has made another foray into the thematic ETF space with the launch of its own cloud computing ETF. The WisdomTree Cloud Computing Fund (WCLD) tracks a Nasdaq index and focuses on companies that deliver computing services via the internet, mainly offering business-oriented software, according to the prospectus.
WCLD trades on the Nasdaq stock market and comes with an expense ratio of 0.45%.
“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. Cloud-based businesses typically have better profit margins and higher growth than other tech companies,” said WisdomTree Executive Vice President and Head of Research Jeremy Schwartz.
He further noted that the global cloud computing network has grown exponentially, and is expected to reach $697 billion in value by 2025.
Methodology & Competitors
Companies in the index must meet minimum thresholds for size and liquidity, be listed on a U.S. exchange and have demonstrated revenue growth of 15% or more during the last two fiscal years. However, once a constituent is included in the index, it simply needs to achieve revenue growth of 7% for at least one of the two prior fiscal years, the prospectus says.
Rebalancing and reconstitution occur every six months, and individual components are equally weighted in the portfolio, the document notes.
This is not WisdomTree’s first thematic ETF: In May, it rolled out the WisdomTree Modern Tech Platforms Fund (PLAT).
WCLD is also not the first cloud computing ETF. There are a few out there, including the $2.2 billion First Trust Cloud Computing ETF (SKYY) and the $500 million Global X Cloud Computing ETF (CLOU). However, SKYY charges an expense ratio of 0.60% and CLOU comes in at 0.68%.
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