Our latest Cloud Technology ETF monthly report explores that latest changes in the market.
- Remote work behaviour continues to boost Cloud
spending post-COVID – rising to $500bn within 2 years.[1]
- Majority of IT spending is moving to the Cloud
away from hardware.
- Cloud infrastructure spending is expected to
double within 3 years (see chart).[2]
- 1st quarter 2021 infrastructure spending
jumped 35% year-on-year to almost $42bn.[3]
- In digital entertainment we are seeing a huge
usage of online Video and Gaming, with Asia being the fastest growing region.
- Multi & Hybrid Cloud is increasingly popular
due to open architecture.
Alibaba Cloud overtaking Google Cloud - as 3rd
largest global cloud revenues.[4]
Performance Review
Cloud Technology ETF (SKYY) Returns
June
|
12 Month*
|
4.99%
|
35.22%
|
Past performance is no guarantee
of future performance.
Source: Solactive, HANetf
*12
Month figures based on 01.07.20 - 30.06.21.
HAN-GINS Cloud Technology ETF (SKYY) enjoyed a strong gain of 4.99% in June and is up 35.22% over the past 12 months. SKYY offers broad exposure to all key areas of the Cloud revolution – infrastructure, security, platform and software – as a service.
Gaming and online Video streaming continues to boost cloud usage, with Gaming already triple the size of Hollywood’s Box office.
Standouts performers for June are Nvidia, Cloudflare, Cloudera, Nutanix, Qad and Medallia, all gaining 20%+ for the month. Cloud security firms have benefited from the increased spending following the growing number of cybersecurity/hack attacks.
For YTD (2021), leading contributors were Alphabet (Google), Nvidia, Intel, Fortinet & Tera data. Tera was up 122.4% YTD largely due to its transformation into a recurring revenue Cloud play (from a transactional business).
Cloud firms involved in the detection and prevention of major cyber attacks are increasingly acquisition targets too for the large Cloud platforms run by AWS, Azure and Google.
Big Tech giants are expanding the Cloud reach into the fast-growing Healthcare sector, as hospitals increasingly switch to remote services, Wearables and Telemedicine. Microsoft’s $16bn acquisition of Nuance Communications reinforces this trend. Nuance is a leader in the field of digitizing doctor patient visit details/conversations and clinical documentation.
In 2021, a clear trend is the move to more hybrid/multi-cloud platforms and infrastructure. Salesforce, IBM and SAP are expected to benefit from this open architecture - allowing the easy flow of data across multiple Clouds.
Holdings
|
% Average Weight
|
Total Return (%)
|
Contribution to Return (%)
|
NVIDIA CORP
|
1.70
|
23.16
|
0.37
|
CLOUDFLARE INC - CLASS A
|
1.37
|
28.98
|
0.35
|
QAD INC-A
|
1.51
|
21.77
|
0.31
|
MEDALLIA INC
|
1.09
|
31.48
|
0.30
|
NUTANIX INC - A
|
1.34
|
21.29
|
0.26
|
CLOUDERA INC
|
1.29
|
23.33
|
0.26
|
MONTNETS CLOUD TECH
|
1.51
|
17.60
|
0.25
|
RESMED INC-CDI
|
1.32
|
17.20
|
0.21
|
ADOBE INC
|
1.33
|
16.06
|
0.20
|
TWILIO INC - A
|
1.18
|
17.31
|
0.20
|
DYNATRACE INC
|
1.58
|
12.91
|
0.19
|
A10 NETWORKS INC
|
1.29
|
15.72
|
0.19
|
ZOOM VIDEO COMMUNICATIONS
|
1.17
|
16.74
|
0.19
|
FORTINET INC
|
1.89
|
8.99
|
0.16
|
Past performance is no guarantee of future performance.
Source: Solactive. Data as of 30.06.21
HAN-GINS Cloud Technology UCITS ETF Performance (As of 30.06.21)
|
1M
|
3M
|
6M
|
YTD
|
12M
|
SI
|
HAN-GINS Cloud Tech UCITS ETF
|
4.99%
|
11.52%
|
13.49%
|
13.49%
|
35.22%
|
74.32%
|
Solactive Cloud Technology Index (NTR)
|
5.06%
|
11.70%
|
13.81%
|
13.81%
|
35.96%
|
76.83%
|
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. Past performance is no guarantee of future performance. Source of all data: Solactive/ HANetf as of 30/06/2021
Industry News
According to Gartner, global public cloud spending is forecast to reach $332.3 billion in 2021, increasing by 23.1% from $270 billion in 2020.[5] Cloud growth benefiting from increased adoption across technologies such as virtualization, edge computing and containerization.
Global Public Cloud Services End-User Spending Forecast (US$mn)
Cloud sub-categories
|
2020
|
2021
|
2022
|
Cloud Business Process Services (BPaaS)
|
46,131
|
50,165
|
53,121
|
Cloud Application Infrastructure Services (PaaS)
|
46,335
|
59,451
|
71,525
|
Cloud Application Services (SaaS)
|
102,798
|
122,633
|
145,377
|
Cloud Management and Security Services
|
14,323
|
16,029
|
18,006
|
Cloud System Infrastructure Services (IaaS)
|
59,225
|
82,023
|
106,800
|
Desktop as a Service (DaaS)
|
1,220
|
2,046
|
2,667
|
Total Market
|
270,033
|
332,349
|
397,496
|
BPaaS = business process as a
service; IaaS = infrastructure as a service; PaaS =
platform as a service; SaaS = software as a service Note: Totals may not add up due to rounding.
Source:
Gartner (April 2021) [6]
Based on projections from the
IDC, worldwide spending on public cloud services and infrastructure is forecast
to double over the next five years. Growing from a $229 billion run rate in
2019 to almost $500 billion by 2023.[7]
This IDC report confirms SaaS
as the largest spending category, representing over half of all public cloud
spending. IaaS is reported as the second
largest spending category and is the fastest growing with a projected five-year
CAGR of 32.0%. PaaS is the lowest spending category, with the second largest
five-year CAGR of 29.9%.[8]
Canalys reports that Infrastructure
services (IaaS) spending grew 35% to US$41.8bn in the first quarter of 2021.
The fast-growing corporate trend of using Cloud for data analytics and machine
learning, data center consolidation, application migration, cloud native
development and service delivery is boosting spending.[9]
Total customer spending
exceeded US$40bn for the first time in Q1, almost US$11bn higher than in Q1
2020 and nearly US$2bn more than in Q4 2020, according to Canalys. The
flexibility of Cloud contracts and improved US COVID situation has increased corporate
confidence in committing to multi-year contracts.[10]
Amazon Web Services (AWS) was
the leading cloud service provider in Q1 2021, growing 32% on an annual basis
to account for 32% of total spend.[11]
Microsoft Azure grew 50% for
the third consecutive quarter, reaching a 19% market share in Q1 2021.[12]
Growth was boosted by cloud consumption and longer-term agreements client commitments. Interestingly Azure also introduced new industry clouds offerings - for
financial services, manufacturing and non-profit organizations, adding to
healthcare and retail.
Google Cloud grew 56% in the
latest quarter (7% market share), benefiting from its Google One approach
driving cross-sales. It launched a new
cloud region in Israel.[13]

For illustrative purposes
only. Source: https://canalys.com/newsroom/global-cloud-market-Q121
Cloud spending is not expected to slow down as the pandemic gets under control. Remote work habits are expected to continue and Cloud computing is arguably the centrepiece of the world’s technical response to the COVID-19 crisis.
By the end of 2021, we expect 60% of companies[14] will utilise public cloud
platforms and 25% of developers[15] will use serverless. Cloud
native technology is driving enterprise digital transformation strategies.
Constituent News
Our Cloud Technology ETF is now even more representative of the Cloud theme globally, with 75 holdings, expanding from 50 (fast-growing players). Our updated Equal Weighted approach, captures smaller and more innovative Cloud companies. Each holding now averages around 1.3% at rebalance.
These changes, ensures SKYY’s broader holdings mirror the global revenue mix across the Cloud industry and its subthemes:
Highlights include:
- More representative of Cloud industry with SaaS holdings (Software as a Service) now the largest weighting at 66%, PaaS 20% and IaaS 14%.
- A new ESG screen follows UN Global Compact rules (excludes controversial weapons, fossil fuels etc).
- SKYY is globally diversified - US exposure 77.2%, followed by China 7.8%, Israel 3.6%, Germany 2.8% and Japan 2.2%.
- Amazons’ AWS generates over 50% of group profits now (see chart).
Outlook
The majority of IT corporate spend is moving away from
onsite hardware and servers to remote Cloud usage.[16] Data centre chip revenues and Hyperscale
Cloud have seen significant revenue boosts during COVID.
Hybrid Cloud’s growing popularity using open-source software such as Linux ensures many more businesses can now embrace the Cloud. This ensures faster scaling up for business globally. The shift to hybrid cloud translates to a blurring of the lines between the public cloud and the traditional data centre.
Artificial intelligence, analytics, security, IoT, and edge computing will likely be key differentiators among the top cloud service providers – along with serverless and managed services.
Cloud usage in Asia for online gaming and streaming has made this region the fastest growing area for digital entertainment.
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