Cloud computing is a hot sector to invest in. With more companies doing business in the cloud, especially now as more people are working remotely, it presents a great investing opportunity over the long term. One estimate from ResearchAndMarkets last year projected that the cloud computing industry would be worth more than $832 billion by 2025, up from $371 billion in 2020 and growing at a compounded annual growth rate of 17.5%.
There are a lot of cloud computing companies out there to choose from and differentiating between them can be difficult. The easier option can be buying shares of an exchange-traded fund (ETF) like First Trust Cloud Computing ETF (NASDAQ:SKYY). It has been doing as well as the S&P 500 over the past year and over the long term, it could deliver even stronger results as the sector grows in size. No stock in the fund accounts for more than 4% of its total weight, with the top three holdings – Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), and Arista Networks (NYSE:ANET) – each making up around 3.6% apiece. But one thing you can be sure of – the fund is full of tech stocks, as they account for more than 80% of the fund’s overall holdings.
The ETF yields a miniscule 0.17% so you won’t be getting much recurring income from this investment. And its expense ratio of 0.60% isn’t as cheap as other funds. But to gain exposure into a top sector like cloud computing, it still could be worth it, especially for investors who aren’t sure which stock may be the best one to buy in that area.