- Cloud Infrastructure spending grew over 30% year on year.[1]
- COVID-19 has sped up cloud adoption rates beyond all expectations.
- Hardware and onsite data recovery services are losing huge market share
to the Cloud.
- Hybrid/Multi- Cloud bridges are being built between Cloud leaders.
- Cloud
is at forefront of streaming music, video and gaming which is growing fast
during the pandemic.
Performance Review
HAN-GINS Cloud Technology ETF (SKYY) offers broad Cloud exposure to all
key areas, meaning its performance is less volatile as a result. The large-cap exposure on our cloud computing ETF ensures it accurately tracks global cloud activity, not just the US market.
COVID-19 and the need
for remote working continues to drive cloud adoption rates. The overall equity
market selloff hurt some of SKYY’s Big Tech holdings. Our cloud computing ETF was down -4.99% in
October, but has already rebounded in early November. US Election worries
discounted the equity market in October. Over 12 months, SKYY remains up 21.49%
and up 13.23% for 2020.[2]
Recent impressive 3rd
quarter Cloud earnings from Amazon, IBM, Google and Microsoft indicate Cloud
continues to be one of the big winners during the pandemic as enterprises
switch to remote working using cloud subscription services.
Cloud Technology ETF Performance
October
|
YTD*
|
12 Month**
|
-4.99%
|
13.23%
|
21.49%
|
Past performance is no guarantee of future performance.
Source: Bloomberg/HANetf
*YTD figures based on 01.01.20 - 31.10.20
**12 Month figures based on
01.10.19 -31.10.20
For the year to date 2020 leading
performers in our portfolio include:
- NVIDIA (up 113.4%), Kingsoft (105.5), Amazon (64.3%),
CEVA (49.6%), Apple (49.3%), Alibaba (43.7%), Qualcomm (42.9%), Salesforce (42.8%),
Alarm.com (35.8%) and Adobe (35.6%).[3]
During October, the following holdings contributed most to SKYY’s
return:
- Twilio
(up 12.9%), Alphabet (10.3%), Splunk (5.3%), Alibaba (3.6%), Cloudflare
(26.6%), F5 Networks (8.3%), Nutanix (9.7%) and Kingsoft (7.1%). Following the
US election, we expect more M&A corporate activity in the Cloud space,
particularly in the Cloud Security (cybersecurity) area. We do not expect the anti-trust concerns to
impact leading Cloud players, other than limiting huge ground breaking deals.[4]
The Top 10 holdings of our cloud computing ETF have changed slightly over the past month: Zoom
Video remains our largest holding at 6.66%, followed by Alibaba Group (5.14%),
NVIDIA (4.95%), Twilio (4.83%), Salesforce (4.63%), Apple (4.48%), Alphabet
(4.21%) and Amazon (4.13%). This is
partly due to Apple’s share price falling 6.0% for the month, along with
Microsoft down 3.74%, Salesforce down 7.6% and IBM down 8.2%. However, these Mega Caps have begun to
recover in early November, recovering much of these losses.[5]
It is clear Cloud
Computing continues to be one of the largest beneficiaries of work from home
(WFH) behaviour changes due to COVID-19. Cloud increasingly drives the Internet
of Things, from Social Media and Digital Entertainment to Healthcare Innovation
(trackers and telemedicine), Future Cars, Cyber Security and AI-Robotics. In the 3rd quarter public spending
on Cloud infrastructure exceeded spending on traditional IT infrastructure for
the second consecutive quarter. Our Cloud report explores how this theme
continues to benefit from the WFH phenomenon.
The latest Cloud Technology is increasingly embedded into mainstream
work-life activities. Larger cloud
players held by SKYY have a distinct advantage over smaller Cloud players –
given their existing global reach.
HAN-GINS Cloud Technology UCITS ETF
– Performance
Total Return NAV to Date (up to
31/10/2020)
|
1M
|
3M
|
6M
|
YTD
|
12M
|
Since Inception
|
HAN-GINS Cloud Technology UCITS ETF (Acc)
|
-4.99%
|
-0.34%
|
16.09%
|
13.23%
|
21.49%
|
34.56%
|
Solactive Cloud Technology Index (NTR)
|
-4.96%
|
-0.21%
|
16.36%
|
13.76%
|
22.18%
|
35.98%
|
HAN-GINS Cloud Technology
UCITS ETF (SKYY) – 1 Year Performance (01/11/19
– 31.10.20)
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 31.10.2020
Industry News
It is clear the COVID has propelled
demand for Cloud Computing services beyond all prior predictions. Contract
tracing, Telemedicine, Home Delivery & remote working are all being
revolutionized by cloud services.
We
expect this to accelerate.
We expect the global public cloud infrastructure
market will grow to 35% to $120 billion in 2021 and that Alibaba’s Cloud will
overtake Google as the 3rd largest, behind AWS and Azure.[6]

For
illustrative purposes only. Past performance is no guarantee of future
performance.
Source: Canalys estimates, October 2020
We predict the biggest Cloud Computing
trends in 2021 as follows:
- Hybrid/Multi-cloud
approaches will lead to a breakdown of barriers between cloud providers
- AI will improve
the efficiency and speed of cloud computing.
- Autonomous vehicles,
machine learning, smart city infrastructure, and COVID Apps/response use
algorithms that can be cheaply delivered via the Cloud.
- Gaming will be increasingly
accessible via the Cloud, similar to music and movies being streamed.
- About a third to
half of most companies’ IT budget will go to cloud services.
- With a huge spike in Healthcare
Cloud services, an annual growth rate of 23% predicted.
Source: https://www.fox5vegas.com/election_hq/healthcare-cloud-computing-market-by-product-saas-iaas-and-paas-and-geography-apac-europe-mea/article_4be9a70f-eb48-50a1-83a6-8d22c8007090.html
Cloud Spending Trends
The demand for cloud services will continue to grow. The trend will not
be temporary as the world will not go back to previous behaviours. Workers will
become increasingly flexible regarding where they work, with cloud providing
the most efficient and cost-effective solution based on time spend on the
service.
The latest Q3 sales figures from the industry’s leaders show the rapid
adoption rates of the cloud computing revolution. Cloud infrastructure services
in Q3 2020 grew 33% to US$36.5bn. This
was US$2bn higher than the Q2 2020 $9.0bn more than Q3 2019.[7] Stricter lockdown measures across Europe will likely boost these number further
in Q4.
In Q3, the cloud leader Amazon Web Services grew its market share of
infrastructure spend to 32% - a $2.6bn increase in revenue over Q3 in 2019.[8] AWS generates more revenue than the following 3 cloud service provider
together. Amazon's sales were up 37% and profit nearly tripled from last year.
Their AWS Cloud unit posted 29% annual revenue gains, now 57% of Amazon's
overall profits.[9] Microsoft’s Azure cloud business posted impressive
48% revenue gains on annual basis to reach a 19% market share.10
Google Cloud retained its 3rd place position with a 7% share.
Constituent News
Below we highlight some of
the best performing Cloud ETF holdings in SKYY’s portfolio. Included are the stock’s individual price
gains, as well as its contribution to SKYY’s portfolio return. Recent additions
such as Zoom Video and Twilio haven been amongst our top performers and
contributor to our recent returns. This broader Cloud definition, includes all
cloud communications, ensuring our cloud computing ETF is one of the most diversified cloud
offering - across all 4 key cloud areas of Infrastructure, Platform and
Software as a Service, plus Security.
Top 10 Constituents
|
Weight
|
Zoom Video
|
6.66%
|
Alibaba
|
5.14%
|
NVIDIA Corp
|
4.95%
|
Twilio
|
4.83%
|
Salesforce.com
|
4.63%
|
Apple Inc.
|
4.48%
|
Alphabet
|
4.21%
|
Amazon.com Inc
|
4.13%
|
Equinix
|
3.94%
|
Oracle Corp
|
3.86%
|
Regional Breakdown
|
Weight
|
North America
|
92.01%
|
Europe
|
2.95%
|
Asia
|
6.16%
|
Source: FactSet/Solactive and Bloomberg Data as of 31/10/20
Below
are the leading contributors to SKYY’s year to date and September performance
leaders – led by NVIDIA, Kingsoft, Zoom Video and Amazon for the year to
date. September had a number of smaller
firms contribute to performance as the large caps swooned.
Top Performing Holdings – Year to Date 2020
(01/01/2020 – 31/10/2020)
Name of Holding
|
Average Weight (%)
|
Total Return (%)
|
NVIDIA
|
4.24
|
113.35
|
KINGSOFT CORP LTD
|
0.41
|
105.52
|
AMAZON
|
4.35
|
64.31
|
CEVA INC
|
0.20
|
49.55
|
APPLE INC
|
4.18
|
49.32
|
ALIBABA GROUP
|
3.80
|
43.65
|
QUALCOMM INC
|
3.85
|
42.89
|
SALESFORCE
|
4.34
|
42.81
|
ALARM.COM
|
0.24
|
35.75
|
ADOBE INC.
|
4.22
|
35.56
|
Past
performance is no guarantee of future performance Source:
Morningstar Direct Data as of 31/10/2020
Top Performing SKYY Contributors – October
2020
Name of Holding
|
Average Weight (%)
|
Total Return (%)
|
Contribution to Return (%)
|
TWILIO
|
4.83
|
12.90
|
0.52
|
ALPHABET A
|
3.70
|
10.27
|
0.37
|
SPLUNK
|
3.72
|
5.27
|
0.18
|
ALIBABA GROUP
|
4.71
|
3.64
|
0.17
|
CLOUDFLARE
|
0.73
|
26.57
|
0.16
|
F5 NETWORKS INC
|
1.02
|
8.28
|
0.08
|
NUTANIX INC.
|
0.56
|
9.74
|
0.05
|
KINGSOFT
|
0.55
|
7.05
|
0.04
|
AVAYA HOLDINGS
|
0.25
|
13.16
|
0.03
|
8x8 INC.
|
0.22
|
11.13
|
1.52
|
PURE STORAGE
|
0.53
|
4.61
|
0.02
|
ALARM.COM
|
0.34
|
5.57
|
0.02
|
NETAPP INC
|
1.32
|
1.15
|
0.02
|
Past
performance is no guarantee of future performance
Source:
Morningstar Direct Data as of 31/10/2020
Fund Details
HAN-GINSCloud Technology UCITS ETF, is a UCITS compliant 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 |
IE00BDDRF924 |
EUR |
Acc |
SIX |
SKYYSW |
SKYY.S |
IE00BDDRF924 |
CHF |
Acc |
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