- Global Cloud spending hit a record high in the 2nd quarter –
$34.6bn up 11% over prior quarter, and 30% over same 2019 period [1].
- COVID-19 lockdown is pushing more remote Cloud adoption rates and usage
than ever seen before.
- Cloud
Infrastructure services led by AWS (Amazon) and Microsoft’s Azure, shows
dramatic growth at expense of onsite data centres.
- IDC
estimate more than two thirds of global organizations across every industry now
use Cloud based systems [2].
- Highest
adoption rates in manufacturing, healthcare and financial services
Performance Review
Cloud Technology ETF HAN-GINS Cloud Technology ETF (SKYY) has continued to benefit from the remote working
behaviours ushered in by the COVID-19 lockdowns globally. In July it posted a gain of 4.73%, following
a June return of 4.2%. For 2020, SKYY is up 13.61%. Its NAV hit a new all-time
high of $10.74 in early August*.
Over the past 3 months, our cloud computing ETF has gained 16.48%, with a one year return of 25.44%.
It has rebounded well from its March lows – cancelling out all losses
suffered earlier in the year.
SKYY continues to be a
major beneficiary of the global Work From Home phenomenon. A surge in demand from the public sector
(governments) and healthcare operators has boosted cloud revenues and adoption
rates. The future has arrived much
sooner for Cloud than many expected.
*Source: HANetf, Bloomberg. Data as of 19.08.2020
July |
YTD* |
12 Month** |
4.73% |
13.61% |
25.44% |
Past performance is no guarantee of future performance.
Source: Bloomberg/HANetf
*YTD figures based on 01.01.20 - 31.07.20
**12 Month figures based on
01.08.19 -31.07.20
For the year to date 2020 leading
performers in our portfolio include:
NVIDIA (80.6%), Amazon (71.3%), Kingsoft (98.0%)
and Inseego (83.9%)
(Source: FactSet/Solactive and
Bloomberg Data as of 31/07/20)
The month of July saw a number of our largest holdings hitting new highs for
2020. This includes Apple, Amazon, Alibaba,
Splunk and NVIDIA. See table on page four
for full breakdown.
It is clear COVID has significantly fast-tracked adoption rates. The
future of tech has already arrived with the lockdowns. We see Cloud now
embedded in mainstream work-life activities. The flexibility of scaling up
services, such as the Disney+ successful new online streaming service and
flexible subscription model, will ensure this shift accelerates further, away
from onsite hardware. Less well known is
the large adoption by governments/public sector of various Cloud services. This
included a huge shift by large public health providers and hospitals.
Globally, we expect Cloud adoption rates to mirror the US – boosting
Cloud spending across Europe and Asia in particular. Cloud is increasingly becoming a utility type
service – charging flexible monthly subscription fees. This pay-for-use model
will encourage even more enterprises to make the switch away from expensive
onsite data centres, which risk becoming increasingly obsolete.
HAN-GINS
Cloud Technology UCITS ETF (SKYY) – 1 Year Performance (01/08/19 – 31.07.20)

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 31.07.2020
Industry News
According to UBS, the global cloud
infrastructure market is expected to grow at 25% annualized (CAGR) from
2019–2023 [3].
Companies globally spent $34.6bn on Cloud
services in the 2nd quarter - up 11% from the prior quarter and 30% above the
same period in 2019 [4].
Asian IT firms, such as Alibaba and Samsung, are
enjoying record earnings and accompanying stock gains. We expect this to
accelerate too as global Cloud infrastructure has reached a tipping point,
allowing most developing countries to enjoy the same benefits as the US. Alibaba, a 4.2% holding, has gained over 30%
in just the past 3 months [5].
IDG’s 2020 Cloud
Survey of 550 IT decision makers shows enterprises plan to invest 32% of their
total IT budgets on cloud infrastructure and applications next year. The survey
indicates companies will spend an average of $74mn on cloud computing, a huge
59% gain over 2018 levels. It is clear the inhouse data centers are no longer
the center of gravity for hosting enterprise applications. The public cloud is
benefiting from massive migration of applications such as websites (53%), collaboration
solutions (52%), storage and backup (42%), and business services (41%) such as
CRM and ERP [6].
Applications & Services Being Migrated to the Cloud

For
illustrative purposes only
Source: IDG
2020 Cloud Survey
We expect cloud spending globally to gain
momentum, given the new Work From Home behaviours, which we see as
lasting. Cloud now drives the Internet
of Things as well as elements of Healthcare Innovation such as telemedicine –
plus Future Cars, Cyber Security and Social Media. These themes are increasingly dependent on
Cloud.
Constituent News
Below we highlight some of
the best performing cloud computing ETF holdings in SKYY’s portfolio. Included are the stock’s individual price
gains, as well as its contribution to SKYY’s portfolio return. The recent
addition of Twilio has been a top performer and contributor to our July return.
This broader definition of cloud includes all cloud communications, ensuring
SKYY is one of the broadest cloud offers across all 3 key cloud areas of
Infrastructure, Platform/Software as a Service.
Top 10 Constituents |
Weight |
Twilio Inc |
4.79% |
Apple Inc |
4.35% |
SAP SE |
4.35% |
Amazon.com Inc |
4.29% |
Alibaba Group Holding Ltd |
4.22% |
Equinix Inc |
4.21% |
NVIDIA Corp |
4.18% |
Splunk Inc |
4.06% |
Cisco Systems Inc |
3.89% |
salesforce.com Inc |
3.87% |
Region Breakdown |
Weight |
North America |
90.31% |
Europe |
4.35% |
Asia |
5.33% |
Source:
Bloomberg, HANetf. Data as of 31.07.20
Cloud
Tech giants Amazon, Microsoft and Apple all touched new highs
during July, continuing into early August.
Apple is now approaching a $2 trillion valuation. Amazon and Microsoft also exceed $1 trillion
market caps. Microsoft’s
commercial cloud revenue topped $50 billion for the year for the first time [7].
Below
we show the leading contributors to SKYY’s July performance – led by Twilio,
Amazon, Apple, Alibaba and NVIDIA.
Amongst the most impressive returns for July were some of our smaller
holdings too including: Sierra Wireless
up 48.6%
Top Performing Contributors – YTD 2020
(01.01.20 – 31.07.20)
Cloud ETF Holdings
|
July Return (%)
|
Contribution Return YTD (%)
|
TWILIO INC - A
|
23.41
|
0.95
|
AMAZON.COM INC
|
14.71
|
0.79
|
APPLE INC
|
16.51
|
0.68
|
ALIBABA GROUP HOLDING-SP ADR
|
16.37
|
0.62
|
NVIDIA CORP
|
11.76
|
0.59
|
SAP SE
|
13.36
|
0.52
|
EQUINIX INC
|
11.84
|
0.47
|
RINGCENTRAL INC-CLASS A
|
11.55
|
0.33
|
SPLUNK INC
|
5.60
|
0.23
|
ALPHABET INC-CL A
|
4.93
|
0.20
|
PALO ALTO NETWORKS INC
|
6.16
|
0.20
|
DELL TECHNOLOGIES -C
|
8.90
|
0.20
|
SALESFORCE.COM INC
|
4.01
|
0.17
|
CROWDSTRIKE HOLDINGS INC - A
|
6.58
|
0.15
|
JUNIPER NETWORKS INC
|
11.02
|
0.12
|
ADOBE INC
|
2.07
|
0.10
|
ZSCALER INC
|
8.29
|
0.10
|
SIERRA WIRELESS INC
|
48.56
|
0.10
|
Past
performance is no guarantee of future performance
Source: FactSet/Solactive and Bloomberg Data as
of 31/07/20
Fund Details
HAN-GINS
Cloud 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.
EXCHANGE |
BB CODE |
RIC |
ISIN |
CURRENCY |
INCOME |
London Stock Exchange |
SKYY LN |
SKYY.L |
IE00BDDRF924 |
USD |
Acc |
London Stock Exchange |
SKYP LN |
SKYP.L |
IE00BDDRF924 |
GBP |
Acc |
Borsa Italiana |
SKYY IM |
SKYY.MI |
IE00BDDRF924 |
EUR |
Acc |
XETRA |
5XYE GY |
5XYE.DE |
DE000A2N5XC4 |
EUR |
Acc |
SIX |
SKYYSW |
SKYY.S |
IE00BDDRF924 |
CHF |
Acc |
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