Key Takeaways
- Cloud technology’s cost savings and flexibility has ensured it has
become a leading beneficiary of the ‘Work From Home’ Covid-19 lockdown.
- Cloud
infrastructure continues to spread globally via the infrastructure giants (AWS,
Microsoft Azure and Google Cloud)
- The
latest Gartner projections show the cloud computing industry almost doubling
from 2018 levels
- Recent
re-balance (July 10th 2020) additions include video conferencing
software provider Zoom, and web communications company Twilio
Performance Review
HAN-GINS CloudTechnology ETF (SKYY) has continued to recover well due to the popularity of
cloud technology. It posted a June gain
of 4.19%, following a May return of 6.7%.
For 2020, SKYY is up over 8%. Its
NAV has exceeded a new all-time high of $10.48/share*
SKYY has benefited from
work from home trends following COVID-19.
Remote office setups with VPNs along with video conferencing and a surge
in demand from healthcare providers and hospitals has boosted cloud revenues.
Over the past 12 months, SKYY has gained over 20%. It has rebounded well from its March lows –
with a 2nd quarter performance of 24.08%. This has cancelled out all
1st quarter losses due to the COVID-19 crisis.
June |
YTD* |
12 Month** |
4.19% |
8.48% |
22.18% |
Past
performance is no guarantee of future performance. Source:
Bloomberg/HANetf
*YTD figures based on 01.01.20 - 30.06.20. **12
Month figures based on 01.07.19 -30.06.20
For the year to date 2020 leading
performers in our portfolio include:
- NVIDIA
(61.6%)
- Amazon
(49.3%)
- Citrix
(34.1%)
- Splunk
(32.7%)
Source: FactSet/Solactive and
Bloomberg Data as of 30/06/20)
The month of June saw a number of these holdings
hitting new highs for 2020, on the backs of rising demand and positive earnings
reports. See table on page four for full breakdown.
HAN-GINS Cloud Technology UCITS ETF (SKYY) - 1 Year Performance (28/06/19 - 30/06/20)

Past performance is not an
indicator for future results and should not be the sole factor of consideration
when selecting a product. Investors should read the prospectus of the Issuer
(“Prospectus”) before investing and should refer to the section of the
Prospectus entitled ‘Risk Factors’ for further details of risks associated with
an investment in this product. Source: Bloomberg Data as of 30.06.2020
Industry News
Significant remote working adoption rates across healthcare and
hospitals have led to a surge in cloud demand and it is unlikely such
behaviours will revert. The scalability of cloud means that the largest medical
facilities have become permanent cloud adoptees. In the medical space, such
technology is powering areas such as telemedicine, robots, chatbots, AI
diagnostic machines and trackers/wearables.
Enterprises now require
fewer IT staff and hardware servers to be physically present – as they
increasingly use remote servers and related third-party IT functions. Cloud infrastructure continues to spread
globally via the infrastructure giants (AWS, Microsoft Azure and Google Cloud).
Ultimately, this ensures that cloud-based software services (SaaS) – including
SAP, Salesforce, Adobe and Oracle are more easily accessible globally.
Consequently, it is easier for smaller firms to adopt these services.

For illustrative purposes only Source: Gartner Research Nov 2019
Gartner Research estimates
that approximately 60% of all IT expenditure over the next few years will be
devoted to the Cloud. The latest Gartner projections show the industry almost
doubling from 2018 levels (see chart).
The ease of cloud technology is helping
to ensure many of these remote behaviours will likely become permanent fixtures
for teleworkers and schools too, well beyond just COVID-19.
The broad-based holdings in SKYY –
covering 50 holdings across Infrastructure, Platform and Software – as a
Service has ensured we capture the broad gains made by Cloud firms over the
past few months. Cloud's cost savings and ease of transition away from onsite
IT operations has boosted adoption rates dramatically. Not surprisingly,
leading cloud tech players have performed strongly propelling our HAN-GINS
Cloud ETF to hit new recent highs too.
Cloud technology firms remain the
leading tech beneficiaries due to the COVID-19 crises and work from home
phenomenon. The trend of remote working
and IT platform flexibility syncs well with Cloud’s subscription model. Even
prior to COVID-19, the annual growth rates were impressive across all major
Cloud areas (SaaS, PaaS and IaaS). With new behaviours cloud security is also
expected to grow faster due to cybersecurity concerns and huge growth in VPN usage.
In summary, these 3 key factors best
summarise the ongoing shift to Cloud Technology:
- Cost Reduction The
reduction in spending on hardware purchases and onsite premises is benefiting cloud.
Cloud helps enterprises avoid the headaches of ongoing infrastructure
maintenance, staff support costs, and internal upgrades.
- Reliability Increased emphasis on system
reliability and security. Few hacks or internet interruptions have been
experienced by major corporations during the lockdowns. A key cloud feature is
the access to tools and information remotely, securely and on demand. Providing
back-up and recovery of systems and business continuity is also a benefit of
the cloud.
- Access and Efficiency Increased
speed of deployment and the simplification of upgrades and updates. This allows
enterprises to scale technology and services in line with their business
growth.
Constituent News
Below we highlight some of
the best performing cloud ETF holdings in SKYY’s portfolio. The table on the next page shows the year to
date returns. Included are the stock’s
individual price gains - as well as its contribution to SKYY’s portfolio
return.
Nvidia is a leading US chip
maker and the inventor of the GPU (Graphic Processing Unit), which creates
interactive graphics on laptops, workstations, mobile devices, notebooks and
PCs. The company focuses on personal
computers (PC) graphics, graphics processing unit (GPU) and also on artificial
intelligence (AI). Its platforms
primarily service four markets – gaming, professional visualisation, data
centres and automakers. Nvidia provides service through PC, mobile and cloud
architectures. Its Tegra mobile processors work on smartphones and tablets an
assist with vehicle navigation and entertainment systems. It developed
GPU-based deep learning in order to use artificial intelligence to approach
problems like cancer detection, weather prediction, and self-driving vehicles.
They are included in all Tesla vehicles.
Nvidia’s chips and computing
systems are being used by about 320 companies involved in self-driving
vehicles. Nvidia offer both advanced
driver assistance systems, plus the cars feature a driver monitoring system and
360-degree surround perception.
Splunk Inc.
continues to be a leading contributor to our cloud ETF. This US firm produces
software for searching, monitoring, and analysing machine generated big data, via
a Web-style interface. The Company's offerings enable users to collect, index,
search, monitor and analyse data.
Adobe cloud software
switched to a monthly subscription service a few years ago. It has seen its
market cap exceed Salesforce, valued approximately at $212bn. It has enjoyed a
15.2% stock gain during 2020 (Source: FactSet/Solactive and Bloomberg
Data as of 30/06/20). Adobe's 2nd quarter earnings were
propelled by strong demand for its cutting-edge subscription-based software
products. It has recorded record annual recurring revenue, and growth for its
cloud offerings. Its portfolio of industry-leading graphic design and
media-creation software (Photoshop, After Effects, and Illustrator) and
platforms for online retail and digital marketing puts the business in a good
position to benefit from the continued growth of digital commerce.
The
major shift to working remotely had resulted in increased demand for Splunk's
cloud-based offerings, including ‘Remote Work Insights’ (RWI). Currently more than 2,000 apps from strategic
partners are available on Splunkbase (an app store of sorts for companies) to
extend the usefulness of the data analytics software for specific business
needs.
Cloud
Tech giants Amazon, Microsoft and Apple have all touched new
highs during the past quarter. Apple is
now worth almost $1.5 trillion. Amazon
and Microsoft also powered above $1 trillion market caps recently.
(Source:
Bloomberg Data as of 30/06/20).
Top
Performing Contributors – YTD 2020 (01.01.20 – 30.06.20
Cloud ETF Holdings
|
Total Return YTD (%) |
% Contribution Return YTD |
NVIDIA CORP
|
61.6
|
2.7
|
AMAZON.COM INC
|
49.3
|
2.1
|
CITRIX SYSTEMS INC
|
34.1
|
0.9
|
SPLUNK INC
|
32.7
|
1.1
|
ADOBE INC
|
32.0
|
1.3
|
MICROSOFT CORP
|
29.8
|
1.3
|
FORTINET INC
|
28.6
|
0.8
|
APPLE INC
|
24.9
|
1.1
|
EQUINIX INC
|
21.3
|
0.9
|
SALESFORCE.COM INC
|
15.2
|
0.6
|
DELL TECHNOLOGIES -C
|
6.9
|
0.1
|
ALPHABET INC-CL A
|
5.9
|
0.2
|
ORACLE CORP
|
5.3
|
0.3
|
QUALCOMM INC
|
5.0
|
0.2
|
PTC INC
|
3.9
|
0.0
|
SAP SE
|
2.8
|
0.0
|
CYPRESS SEMICONDUCTOR
|
2.6
|
0.1
|
F5 NETWORKS INC
|
2.4
|
0.0
|
VMWARE INC-CLASS A
|
2.0
|
0.1
|
ALIBABA GROUP HOLDING-SP ADR
|
1.7
|
0.1
|
INTEL CORP
|
1.0
|
0.1
|
SKYY ETF PERFORMANCE YTD
|
8.48
|
|
Past performance is
no guarantee of future performance
Source: FactSet/Solactive and Bloomberg Data as of 30/06/20
Fund Details
HAN-GINSCloud Technology UCITS ETF, is a UCITS compliant cloud computing ETF domiciled
in Ireland.
The
SKYY cloud ETF tracks the Solactive Cloud Technology Index and seeks to provide
exposure to companies active in the field of cloud computing, such as service
providers or producers of equipment or software focused on cloud computing. Please
remember that the value of your investment may go down as well as up and past
performance is no indication of future performance.