- Cloud spending by governments and healthcare providers are amongst the
fastest growing.
- Corporate IT departs continue the huge shift away from hardware and
onsite service
- COVID-19 vaccines are unlikely to stop the tidal wave of Cloud spending.
- Increased corporate M&A activity can be seen across Cloud
- Hybrid/Multi - Cloud bridges are being built between Cloud leaders
Performance Review
HAN-GINS Cloud Technology ETF (SKYY), our cloud computing ETF offers broad exposure to all key
areas of the Cloud revolution – infrastructure, security, platform and
software. It includes large-cap
multinationals as well as mid-and small-caps in its 50 holdings. SKYY’s large-cap and
infrastructure exposure ensures it accurately tracks global cloud activity, not
just the US market.
WFH behaviours and the
pandemic continue to boost demand for Cloud computing services globally –
driving up cloud adoption rates. Our cloud computing ETF gained an impressive 9.50% in November
and is now up 23.98% for 2020. Over 12
months, SKYY is up 28.01%.[1]
Record 3rd
quarter Cloud earnings from Amazon, IBM, Google, Zoom, Crowdstrike and
Microsoft is evidence that Cloud continues to be one of the big winners during
the pandemic as enterprises switch to remote working using flexible cloud subscription
services.
Cloud Technology ETF (SKYY) Performance
November
|
YTD*
|
12 Month**
|
9.50%
|
23.98%
|
28.01%
|
Past performance is no guarantee of future performance.
Source: Bloomberg/HANetf
*YTD figures based on 01.01.20 - 30.11.20
**12 Month figures based on
01.12.19 - 30.11.20
For the year to date 2020, top performers
in our portfolio include:
- NVIDIA,
Kingsoft, Amazon, CEVA, Apple, Alibaba, Qualcomm, Salesforce, Alarm.com and
Adobe (35.6%).[2]
During November, the following holdings
contributed most to SKYY’s return:
- Palo Alto Networks (up 32.9%), Twilio (14.7%),
Cisco (19.8%), CrowdStrike (23.8%), HP (27.8%), and Cloudflare (44.5%). CrowdStrike
is a cybersecurity company providing cloud-native endpoint security platforms.
It's also engaged in cloud security assessment and helps enhance the security
of cloud infrastructures.
- Zoom remains the largest holding at 6.32%,
followed by Twilio (5.07%), NVIDIA (4.84%), Apple (4.47%) and Salesforce (4.47%). Holdings are concentrated in the US with a 91.95%
weighting, followed by Asia (4.96%) and Europe (3.08%).[3]
During
November, these following developments pointed to further positive growth for
SKYY:
- Gartner[4] and Forrester[5] Research both revised their cloud spending projections up for 2021-2024.
- Fast track adoption rates of Cloud due to WFH
behaviours has led to both cloud security and cloud communications companies to
enjoying significant growth.
- 3rd quarter revenues posted by the
largest Cloud players beat most expectations.[6]
-
IT departments continue to boost their cloud
spending and it is expected to shortly exceed their spending on onsite hardware
and services.[7]
- Salesforce is buying Slack for $27.7bn, the
biggest bet this year by a tech company looking to capitalize on the shift to
remote work.[8]
- 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.
- Predictions show the global cloud computing
market size is expected to grow from $371.4bn in 2020 to $832.1bn by 2025, with
a Compound Annual Growth Rate (CAGR) of 17.5% during the forecast period.[9]
- The proportion of IT spending shifting to cloud
is accelerating during and in the expected aftermath of the COVID-19 crisis;
cloud spending is now projected to make up 14.2% of the total global enterprise
IT spending market in 2024, up from 9.1% in 2020.[10]
- Expected to grow at 16% to $117.8 billion,
software as a service (SaaS) will still be the largest market segment for
end-user cloud IT spending, while application infrastructure services (PaaS)
are expected to grow at 26.6% to about $55.5bn.[11]
- The growth in PaaS will be driven by remote
workers continuing to access high-performing and scalable infrastructure. While cloud infrastructure services (IaaS)
spending is projected to increase 26.9% to $65.3bn as IT departments
aggressively move away from onsite hardware expenditures.[12]
Worldwide
Public Cloud Services End-User Spending Forecast (Millions of U.S. Dollars)
|
2019
|
2020
|
2021
|
2022
|
Cloud Business Process Services (BPaaS)
|
45,212
|
44,741
|
47,521
|
50,336
|
Cloud Application Infrastructure Services (PaaS)
|
37,512
|
43,823
|
55,486
|
68,964
|
Cloud Application Services (SaaS)
|
102,064
|
101,480
|
117,773
|
138,261
|
Cloud Application Services (SaaS)
|
12,836
|
14,880
|
17,001
|
19,934
|
Cloud System Infrastructure Services (IaaS)
|
44,457
|
51,421
|
65,264
|
82,225
|
Desktop as a Service (DaaS)
|
616
|
1,204
|
1,945
|
2,542
|
Total Market
|
242,696
|
257,549
|
304,990
|
362,263
|
For illustrative purposes only. Source: Gartner (Nov 2020)
HAN-GINS Cloud Technology UCITS ETF
– Performance
Total Return NAV to Date (up to
30/11/2020)
|
1M
|
3M
|
6M
|
YTD
|
12M
|
Since Inception
|
HAN-GINS Cloud Technology UCITS ETF (Acc)
|
9.50%
|
1.10%
|
19.08%
|
23.98%
|
28.01%
|
47.33%
|
Solactive Cloud Technology Index (NTR)
|
9.54%
|
1.22%
|
19.37%
|
24.61%
|
28.73%
|
48.95%
|
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 30.11.2020
Industry News
It is clear 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. This
is set to accelerate.
- Alibaba
in China is likely to overtake Google as the 3rd largest, behind AWS
and Azure.[13]
- Healthcare
Cloud spending is exploding – as hospitals and governments upgrade for
telemedicine and other remote medical services.[14]
- Smaller
tech firms will likely big beneficiaries due to anti-trust/regulatory focus on
Big Tech. This benefits broader Tech ETFs like ITEK which has a lot of smaller
holdings and is not dominated by Megacaps.
- We
don’t expect any big anti-trust (monopolies) breakup under the new
administration.
- Rivals
Microsoft and Oracle last year announced they were linking their clouds to
allow joint customers to migrate and run their enterprise application workloads
across Microsoft Azure and Oracle Cloud. The move was seen as a bid by Redmond,
Wash.-based Microsoft -- the No. 2 cloud provider -- and Redwood City, Calif.,
cloud underdog Oracle to better compete against AWS.
We predict the biggest Cloud
Computing trends in 2021 as follows:
-
94%
of the worldwide workloads will be controlled by the leading cloud data
centres of the world[15]
- 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 will 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.
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.[16] Stricter lockdown measures across Europe
will likely boost these number further in Q4.
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 have been amongst our top performers for the
year. 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 Communications Inc
|
6.32%
|
Twilio Inc
|
5.07%
|
NVIDIA Corp
|
4.84%
|
Apple Inc
|
4.47%
|
salesforce.com Inc
|
4.47%
|
Alphabet Inc
|
4.17%
|
Alibaba Group Holding Ltd
|
4.06%
|
Amazon.com Inc
|
3.94%
|
Adobe Inc
|
3.75%
|
Microsoft Corp
|
3.66%
|
Regional Breakdown
|
Weight
|
North America
|
91.95%
|
Europe
|
3.08%
|
Asia
|
4.96%
|
Source: FactSet/Solactive and Bloomberg Data as of
30/11/20
Top Performing SKYY
Contributors – November 2020
Below are the
leading contributors to SKYY’s November performance – ranked by percentage
contribution to SKYY’s gains.
Name of Holding
|
Average Weight (%)
|
Total Return (%)
|
Contribution to Return (%)
|
Palo alto networks
|
3.57
|
32.88
|
0.95
|
Twilio
|
5.10
|
14.74
|
0.71
|
Cisco systems
|
3.27
|
19.83
|
0.59
|
Crowdstrike holdings
|
2.80
|
23.77
|
0.59
|
Hewlett packard enterprise
|
1.84
|
27.78
|
0.44
|
Apple inc.
|
4.47
|
9.55
|
0.43
|
Sap se
|
3.08
|
14.47
|
0.43
|
Ibm corp.
|
3.56
|
12.18
|
0.43
|
Ringcentral inc.
|
2.89
|
14.98
|
0.41
|
Alphabet
|
4.17
|
8.56
|
0.36
|
Cloudlfare inc.
|
1.05
|
44.47
|
0.35
|
Nvidia corp.
|
4.84
|
6.92
|
0.34
|
Dell technologies
|
2.23
|
14.55
|
0.31
|
Past
performance is no guarantee of future performance
Source:
Morningstar Direct Data as of 30/11/2020
Product Details
HAN-GINS Cloud Technology UCITS ETF, is a UCITS compliant domiciled
in Ireland.
SKYY
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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