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BetaShares to launch cloud computing ETF


The effects of COVID-19 and the lockdowns that followed have changed the way we interact and conduct business forever. The virus had a big impact on almost every sector of the economy, forcing employees to work from home and businesses to accelerate the process of digitisation out of necessity rather than choice, in order to reach their customers. One big beneficiary of this switch has been cloud computing.

To put it simply; cloud computing is the delivery of different services through the internet, such as data storage, servers, databases, networking, and software. When you access your Gmail account or upload a photo to Facebook, it’s all done in the cloud. The shift to the cloud accelerated through the pandemic as employees working from home increasingly depended on cloud services to access work systems. The two basic types of cloud service companies are: Infrastructure as a Service (IaaS) and Software as a Service (SaaS) companies.

In 2021 and beyond, everybody will continue to rely thoroughly on the cloud, especially with the onset of 5G, artificial intelligence and e-gaming. Services from streaming video to remote collaboration, smart sensors, and other cloud-reliant digital technologies will ensure cloud services are in high demand. And those that gain are companies such as the Amazons, Googles, and Microsofts, which provide cloud-to-edge ecosystems, and all the companies that provide cloud services such as Twilio, Shopify and Zscaler.

How do I get exposure to cloud computing?

BetaShares Cloud Computing ETF: BetaShares has announced the launch of Australia’s first cloud computing ETF, under the ticker code (ASX: CLDD). The ETF, to be listed on the ASX in late February, will provide thematic exposure to the cloud computing sector through a portfolio of carefully selected companies. Betashares says these companies “are involved in the delivery of computing services, servers, storage, databases, networking, software, analytics and other services over the internet. Examples of current index constituents include Xero, Shopify, DropBox, and Zoom.”

According to CISCO “Cloud data centres will process 94 per cent of workloads in 2021.” Cloud computing trends show year-over-year growth. BetaShares says cloud-based computing services has been “one of the fastest-growing segments of the global technology revolution in recent years,” with revenues forecast to grow 17.5 per cent a year, to reach US$832 billion by 2025.”

Here is what we know about the ETF today:

  • The BetaShares Cloud Computing ETF (CLDD) will track an index, most probably the Indxx Global Cloud Computing Index or ISE Cloud Computing Index.
  • Betashares says CLDD will aim to track an index that, “since November 2013 to end-January 2021 has returned 34.4 per cent a year in A$ terms, compared to 12.4 per cent a year. for the MSCI World Index, and 24.8 per cent a year for the NASDAQ-100 Index”
  • The ETF will be built similar to the Global X Cloud Computing ETF (CLOU) which has 36 companies in the fund.

The BetaShares Cloud Computing ETF (CLDD) will be another unique way for investors to gain exposure to leading listed cloud-computing companies, across both developed and emerging markets, in a single ASX-listed security.

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