Should You Invest in the First Trust Cloud Computing ETF (SKYY)?

Launched on May 27, 2011, the First Trust Cloud Computing ETF (SKYY) is a passively managed exchange traded fund designed to provide a broad exposure to the Technology - Cloud Computing segment of the equity market.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Technology - Cloud Computing is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 3, placing it in top 19%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $3.29 billion, making it one of the larger ETFs attempting to match the performance of the Technology - Cloud Computing segment of the equity market. SKYY seeks to match the performance of the ISE Cloud Computing Index before fees and expenses.

The ISE Cloud Computing Index is a modified market capitalization weighted index designed to track the performance of companies actively involved in the cloud computing industry.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.6%, making it on par with most peer products in the space.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, 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 86.1% of the portfolio. Telecom and Consumer Discretionary round out the top three.

The top 10 holdings account for about 33.77% of total assets under management.

Performance and Risk

So far this year, SKYY has added roughly 21.83%, and was up about 17.1% in the last one year (as of 09/14/2026). During this past 52-week period, the fund has traded between $104.16 and $168.91.

The ETF has a beta of 1.26 and standard deviation of 26.98% for the trailing three-year period, making it a medium risk choice in the space. With about 64 holdings, it effectively diversifies company-specific risk.

Alternatives

First Trust Cloud Computing ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, SKYY is a sufficient option for those seeking exposure to the Technology ETFs area of the market. Investors might also want to consider some other ETF options in the space.

WisdomTree Cloud Computing ETF (WCLD) tracks BVP NASDAQ EMERGING CLOUD INDEX and the Global X Cloud Computing ETF (CLOU) tracks INDXX GLOBAL CLOUD COMPUTING INDEX. WisdomTree Cloud Computing ETF has $317.83 million in assets, Global X Cloud Computing ETF has $361.02 million. WCLD has an expense ratio of 0.45%, and CLOU charges 0.68%.

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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This article originally published on Zacks Investment Research (zacks.com).

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