Cloud Technology Monthly Report | February

19 February 2021

 

  • Record earnings were reported by the largest Cloud providers, including constituents of our cloud computing ETF
  • Healthcare Cloud spending hits new highs as hospital adoption rates reach record levels
  • Cloud security services is in huge demand due to remote workers
  • EV car makers are adopting cloud
  • Majority of Corporate IT budgets are expected to be devoted to Cloud spending
  • Increased corporate M&A activity across Cloud 

 

Performance Review

The HAN-GINS cloud computing ETF offers broad exposure to all key areas of the Cloud revolution; infrastructure, security, platform and software.  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.

Big Cloud infrastructure providers were SKYY’s largest contributors to performance in January, including Amazon, Microsoft, Intel, Zoom, Alibaba and Twilio.

Healthcare has also seen a boom in Cloud adoption rates.

 

Cloud Technology ETF (SKYY) Returns

January

12 Month*

1.65%

29.71%

Past performance is no guarantee of future performance. Source: Bloomberg, HANetf *12 Month figures based on 31.01.20 - 31.01.21

 

Some of our smaller holdings showed the most impressive gains in January, posting gains exceeding 10%. The table below shows Rackspace, Kingsoft, Teradata and Inseego as the leaders of the pack.

Cloud adoption rates continue to spike with record revenues being posted by the leading Cloud infrastructure firms Amazon, Microsoft, Google and Alibaba.

The recent Salesforce-Slack deal is an example of future consolidation we expect in the Cloud space.  Remote working has boosted the need for far better cloud security services.  A number of our holdings, Zscaler and Crowdstrike, are leaders in the cloud security space and continue to perform well, following record setting 2020 gains.  Big trends include moves to more hybrid/multi-cloud platforms and infrastructure.  This will allow large companies to increasingly adopt cloud services for their various units globally – allowing the easy flow of data across multiple Clouds.  

Source of all data:  Solactive, 31.01.21

Holdings

% Average Weight

Total Return (%)

Contribution to Return (%)

RACKSPACE TECHNOLOGY INC

0.13

20.36

0.04

KINGSOFT CORP LTD

0.68

20.00

0.12

TERADATA CORP

0.29

19.72

0.05

INSEEGO CORP

0.21

18.68

0.03

EXTREME NETWORKS INC

0.24

17.42

0.04

AVAYA HOLDINGS CORP

0.24

16.14

0.04

BANDWIDTH INC-CLASS A

0.35

15.92

0.05

MONTNETS CLOUD TECHNOLOGY-A

0.12

15.35

0.03

QUALYS INC

0.45

13.62

0.06

SIERRA WIRELESS INC

0.1

12.02

0.03

INTEL CORP

4.12

11.42

0.45

F5 NETWORKS INC

1.29

11.37

0.15

ZOOM VIDEO COMMUNICATIONS-A

4.03

10.30

0.37

CLOUDERA INC

0.46

9.78

0.04

 

Past performance is no guarantee of future performance. Source: Solactive. Data as of 31.01.2021

 

HAN-GINS Indxx Healthcare Innovation UCITS ETF – Performance

As of 31.01.21


1M

3M

6M

YTD

12M

SI

HAN-GINS Cloud Tech UCITS ETF

1.65%

16.04%

15.64%

1.65%

29.71%

56.13%

Solactive Cloud Technology Index (NTR)

1.69%

16.19%

15.94%

1.69%

30.40%

58.00%

Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. 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 / HANetf. Data as of 31/01/2021

 

Industry News

COVID has forced Healthcare and Hospital systems to increasingly adopt Cloud computing.  Such spending is amongst the fastest growing segments within Cloud - enabling the onboarding of new health-tech products and services (Telemedicine etc).  Other key developments in Cloud include:

  • Cloud spending on PaaS is set to double in just over 2 years[1]
  • Asia Pacific = fastest growing for both Cloud and Online Gaming[2]
  • Amazon's new CEO - plus IBM & Microsoft chiefs - all ran their Cloud units before CEO role
  • Amazon’s Cloud unit AWS represented ~60% of all Amazon's total profits in 2020[3]
  • Cloud profit margins are amongst the highest in IT due to their reliable, fast growing subscription model
  • SAP Euro Tech giant, making Cloud top priority for growth. [4] 

 

Constituent News

Our cloud computing ETF currently has 50 constituents, with the US country weighting at 90.9%. It is followed by Asia (5.1%) and Europe (4.0%). Our US weighting has dropped in recent months, given the rise of Asian players primarily.

Top 10 holdings include Intel (4.8%), Alphabet (4.2%), Equinix (4.2%), Microsoft (4.2%), Apple (4.0%), Amazon (4.0%), SAP (4.0%), Cisco (4.0%), NVIDIA (4.0) and Salesforce (4.0%).

Highlighted below are the leading contributors this past month – includes Twilio, Intel, Alibaba, Zoom and Microsoft.

Amazon, Microsoft and Google all posted record cloud growth – with Amazon’s revenues jumping over 50% over the prior year’s quarter. Their AWS Cloud unit now accounts for almost 60% of Amazon’s total earnings.  SAP has made Cloud their leading initiative. While Google’s cloud unit lost money, its revenues showed considerable growth.  Google is spending big on its cloud infrastructure buildout, thus bleeding money. 

Top Contributors – January 2021

Holdings

% Average Weight

Total Return (%)

Contribution to Return (%)

INTEL CORP

4.12

11.42

0.45

ZOOM VIDEO COMMUNICATIONS-A

4.03

10.30

0.37

TWILIO INC - A

4.43

6.18

0.35

ALIBABA GROUP HOLDING-SP ADR

3.69

9.07

0.33

MICROSOFT CORP

3.82

4.29

0.18

ALPHABET INC-CL A

4.07

4.26

0.17

EQUINIX INC

3.73

3.61

0.17

F5 NETWORKS INC

1.29

11.37

0.15

KINGSOFT CORP LTD

0.68

20.00

0.12

JUNIPER NETWORKS INC

0.87

8.49

0.08

HEWLETT PACKARD ENTERPRISE

1.73

4.14

0.07

QUALYS INC

0.45

13.62

0.06

CROWDSTRIKE HOLDINGS INC - A

3.81

1.88

0.06

TERADATA CORP

0.29

19.72

0.05

Past performance is no guarantee of future performance. Source:  Solactive. Data as of 31.01.21

 

Outlook

Volkswagen announced it will use Microsoft's cloud services to streamline its software development efforts for EV and self-driving cars.[5] 

In a post-pandemic world, Cloud will continue to underpin the digital revolution. According to Forrester predictions, the global public cloud infrastructure market will grow 35% to 120 billion dollars in 2021.[6] 

The integration of cloud computing with AI, big data, and IoT can be leveraged to attain new heights of innovation. Cloud services can easily take over on-premises infrastructure and increase business efficiency.

Hybrid Cloud Computing will increasingly take centre stage with services across public, private and edge environments.  This enables ever faster scaling up for business globally.  The shift to hybrid cloud as the global standard, ensures there will increasingly be a merging of the lines between the public cloud and the traditional data centre.  Hybrid clouds can reduce IT development costs in the long-term.

The protection of data has become crucial and Cloud is considered one of the best forms of data backup - secure enough to keep hackers away. Data recovery becomes easier with cloud computing in place. We expect significant consolidation across the Cloud Security area as more Cloud companies attempt to build economies of scale and security services into their 1-stop offerings.

 

Product Details

HAN-GINS Cloud Technology UCITS ETF, is a UCITS compliant ETF domiciled in Ireland.

The 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.

Visit the SKYY Fund Page for more information.

 

 

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