Key Takeaways
Hybrid/Multi-Cloud agreements are being built between Cloud leaders.
- Global public cloud spending is set to dominate enterprise software
spending, exceeding $750bn by 2025. (Gartner).
- Cloud Infrastructure spending to exceed $100bn in 2021.
- Majority of corporate IT budgets expected to be devoted to Cloud
spending.
- Increased corporate M&A activity seen across Cloud (i.e.,
Salesforce-Slack deal).
Cloud Technology ETF (SKYY) Performance
December
|
12 Month*
|
4.25%
|
29.25%
|
Past
performance is no guarantee of future performance.
Source: Bloomberg/HANetf
*12 Month figures based on
01.01.20 - 31.12.20
Performance Review
HAN-GINS Cloud computing ETF (SKYY) offers broad exposure to all key
areas of the Cloud revolution – infrastructure, security, platform and software
– as a service. SKYY 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 well
beyond just the US and software developers.
COVID related WFH
behaviours continues to boost demand for cloud computing services globally – fast
tracking Cloud adoption rates. Our Cloud computing ETF gained an impressive 4.25% in December and was
up 29.25% for 2020. [1] Past performance is no guarantee of future
performance.
We expect continued
M&A activity following the recent Salesforce-Slack deal. Forthcoming 4th quarter results
are expected to mirror recent record 3rd quarter Cloud earnings from
Amazon, IBM, Google, Zoom, Crowdstrike and Microsoft. Big trends include moves
to more hybrid, multi-cloud infrastructure, with flexible on-demand
subscription services (pay per use), plus demand for greater cloud security.
For the full year 2020, top performers
in the portfolio of our Cloud computing ETF include a number of holdings exceeds 100% gains. It is encouraging to see these gains being
shared across companies of varying sizes throughout the Cloud landscape (megacaps,
large caps and midcaps):[2]
Holdings
|
% Average Weight
|
Total Return (%)
|
Contribution to Return (%)
|
KINGSOFT CORP LTD
|
0.50
|
150.89
|
0.49
|
ALARM.COM HOLDINGS INC
|
0.32
|
140.75
|
0.37
|
NVIDIA CORP
|
4.90
|
122.30
|
4.65
|
INSEEGO CORP
|
0.22
|
111.05
|
0.21
|
CLOUDFLARE INC - CLASS A
|
0.35
|
106.78
|
0.63
|
CROWDSTRIKE HOLDINGS INC - A
|
1.20
|
99.44
|
2.18
|
APPLE INC
|
4.43
|
82.31
|
3.12
|
AMAZON.COM INC
|
4.46
|
76.26
|
3.31
|
Source: Morningstar Direct Data as of 31/12/20. Past performance is no guarantee of future performance.
We
predict the biggest Cloud Computing trends in 2021 to include:
- Hybrid cloud will be the norm. In 2020, we saw
more cloud migrations than ever before as the landscape of data lakes has
continued to evolve. Leading to a breakdown of barriers between cloud providers
- There will be a maturing of the cybersecurity
around cloud infrastructure.
- Cloud-native projects will accelerate. Expect
to see the percentage of purpose-built, cloud-ready (refactored) applications
increase in 2021 as organizations look to gain the elasticity, scalability and
cost benefits of the cloud.
- A stronger focus on global visibility and
governance of data. In hybrid- and multi-cloud environments, global visibility and
governance of storage will be a major focus moving forward.
- 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.
HAN-GINS Cloud Technology UCITS ETF
– Performance
Total Return NAV to Date (up to
31/12/2020)
|
1M
|
3M
|
6M
|
YTD
|
12M
|
Since Inception
|
HAN-GINS Cloud Technology UCITS ETF (Acc)
|
4.25%
|
8.45%
|
19.14%
|
29.25%
|
29.25%
|
53.59%
|
Solactive Cloud Technology Index (NTR)
|
4.31%
|
8.59%
|
19.46%
|
29.97%
|
29.97%
|
55.37%
|
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 31/12/20
The global cloud computing
market size is expected to grow from $371.4bn in 2020 to $832.1bn by 2025 - a
Compound Annual Growth Rate (CAGR) of 17.5% during the forecast period.[3] Worldwide end-user spending on public cloud
services is forecast to grow 18.4% in 2021 to total $304.9bn, up from $257.5bn
in 2020, according to Gartner, Inc.[4]
-
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.
We expect significant consolidation (acquisitions) across
the Cloud Security area as more Cloud companies attempt to build economies of
scale and security services into their 1-stop offerings.
- IT
departments continue to boost their cloud spending – expected to shortly exceed
their spending on onsite hardware and services.
- We do not expect the anti-trust concerns to
impact leading Cloud players, other than limiting huge groundbreaking deals.
- Cloud increasingly underpins the Digital Revolution – via the Internet
of Things. This includes driving Social Media,
Digital Entertainment to Healthcare Innovation (trackers and telemedicine),
Future Cars, Cyber Security and AI-Robotics.
- In the 4th quarter, public spending on Cloud infrastructure
exceeded spending on traditional IT infrastructure for the second consecutive
quarter. Governments and Healthcare providers are now among the leading Cloud
spenders.

For illustrative purposes only. Source: https://www.statista.com/chart/18819/worldwide-market-share-of-leading-cloud-infrastructure-service-providers/
Industry News
While COVID has fast-tracked
demand for Cloud Computing services beyond all expectations, we see continued
adoption globally and new trends emerging (see above).
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.[5] The 2nd COVID lockdown
measures globally will likely boost these numbers further in Q4.
The multi-cloud
pioneered by the likes of IBM’s Red Hat subsidiary, along with disaster recovery
services (DraaS) and cybersecurity additions ensures Cloud growth remains in
its early stages.
DRaaS adoption is being driven
by the need for global business resilience, helping to replicate and hosting
virtual servers in the global cloud – and ensuring full protection of data.
Demand for multi-cloud
and hybrid infrastructure will grow as companies reassess their cloud
usage. Many organizations are
reassessing where they are hosting certain workloads and how best to optimise
IT budgets. We expect a majority of
firms to embrace a hybrid approach to their cloud infrastructure needs. This means a dramatic decrease in
enterprises’ on-premises infrastructure in the next 2 years.
Such Hybrid Cloud
Computing will begin to take centre stage with services spanning public,
private and edge environments. This will
enable faster scaling up for business globally too. The shift to hybrid cloud as the global standard
means there will increasingly be a blurring of the lines between the public
cloud and the traditional data centre.
The shift to an
On-Demand service for hybrid cloud computing means organizations will have more
freedom of choice for their budgets/IT spending, providing far more user
flexibility.
We continue to see far
greater integration of Cloud Computing with Big Data, and IoT services. The changing IT landscape means Cloud
computing will likely serve as a common workspace for IoT, plus the source of
big data.
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. Recent additions
such as Zoom Video and Twilio have been among our top performers for the year
and remain in our Top 10. This broader
Cloud definition, includes all cloud communications, ensuring SKYY is one of
the most diversified cloud offering - across all 4 key cloud areas of
Infrastructure, Platform and Software as a Service, plus Security. The US weighting at 92.4% has dropped in
recent months, given the rise of Asian players primarily.
Top Performing SKYY Contributors – December 2020
Top 10 Constituents
|
Weight
|
Twilio Inc.
|
5.14%
|
Apple Inc.
|
4.78%
|
NVIDIA Corp
|
4.52%
|
Zoom Video
|
4.27%
|
Palo Alto Networks Inc.
|
4.14%
|
Alphabet Inc.
|
4.00%
|
Oracle Corp
|
3.90%
|
Amazon.com Inc
|
3.89%
|
Salesforce.com
|
3.88%
|
Adobe
|
3.76%
|
Regional Breakdown
|
Weight
|
North America
|
92.40%
|
Europe
|
3.18%
|
Asia
|
4.42%
|
Source: FactSet/Solactive and
Bloomberg Data as of 31/12/20
Name of Holding
|
% Average Weight
|
Total Return (%)
|
Contribution to Return (%)
|
CROWDSTRIKE HOLDINGS INC - A
|
3.28
|
38.19
|
1.05
|
RINGCENTRAL INC-CLASS A
|
3.42
|
27.58
|
0.80
|
PALO ALTO NETWORKS INC
|
3.85
|
20.91
|
0.74
|
APPLE INC
|
4.62
|
11.46
|
0.51
|
ORACLE CORP
|
3.78
|
12.08
|
0.44
|
FORTINET INC
|
2.30
|
20.53
|
0.44
|
ZSCALER INC
|
1.65
|
28.22
|
0.40
|
NETAPP INC
|
1.73
|
24.25
|
0.37
|
TWILIO INC - A
|
5.24
|
5.75
|
0.30
|
SAP SE
|
3.06
|
7.52
|
0.23
|
8X8 INC
|
0.36
|
74.36
|
0.19
|
ADOBE INC
|
3.73
|
4.52
|
0.17
|
HEWLETT PACKARD ENTERPRISE
|
1.91
|
8.40
|
0.16
|
KINGSOFT CORP LTD
|
0.55
|
28.51
|
0.15
|
ALARM.COM HOLDINGS INC
|
0.48
|
36.28
|
0.15
|
MICROSOFT CORP
|
3.61
|
3.90
|
0.14
|
CISCO SYSTEMS INC
|
3.27
|
4.02
|
0.14
|
Past performance is no guarantee of future performance
Source: Morningstar Direct Data as of 31/12/2020
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.
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
|
SKYY SW
|
SKYY.S
|
IE00BDDRF924
|
CHF
|
Acc
|