Specialist Investment Awards winner’s interview: First Trust Cloud Computing UCITS ETF

Specialist Investment Awards winner's interview: First Trust Cloud Computing UCITS ETF

First Trust’s Cloud Computing UCITS ETF was the winner of the Best Specialist Technology ETF category at the Investment Week Specialist Investment Awards 2020.

The judges said the ETF provides good exposure to an exciting subset of technology, noting providing workers with the ability to work from home has become a strong support for the cloud computing thematic.

Here we speak to First Trust about the reasons behind the ETF launch, why cloud computing represents the next chapter in the innovation of the digital age and how the vehicle sits within the group’s wider range.  

Why did you launch the First Trust Cloud Computing UCITS ETF and what are you trying to offer investors? How could the ETF fit in their portfolios?  

First Trust have always been pioneers of thematic investing, offering investors access to some of the biggest global megatrends since 2006.

The cloud computing theme has been available via our US domiciled fund since 2011 so, for us, it was a natural move to offer our European investors a UCITS vehicle providing cost-effective exposure to a technology which is impacting our everyday lives.  

Thematic investing essentially allows investors to focus on the structural forces or themes that will play out over the longer-term, shaping and revising competitive landscapes, but importantly to look past short-term market noise and uncertainties.  

Our Cloud Computing ETF provides a forward-looking, longer-term approach to unlocking the power of the cloud. For investors’ portfolios, this ETF could act as a useful diversifier, a core technology or a large-cap US growth allocation or perhaps more broadly as pure play access to the cloud computing phenomenon.  

What do you see as the potential of this theme as an investment opportunity for investors?  

Continuing demand for remote access to data and online services has put cloud computing at the forefront of internet-based innovation. It represents the next chapter in the innovation of the digital age, capable of unlocking access to both future and emerging technologies.

The evolution of our reliance on the internet and the growing power of cloud computing has seen some of the world’s biggest companies continuing to invest in this space, effectively making it comparable to a utility.

The global pandemic, various lockdown measures and the majority of organisations that have been forced to work from home have simply accelerated a shift in this theme that was already happening.  

The cloud is tapping into massive swathes of our economy and society, affecting how we use financial services and many of the fundamentals of everyday life.

From watching a TV show on Netflix to scanning a QR code at your local, using the cloud has become effortless.

The screen you look at is no longer dependent on the computer it is attached to, it is only constrained by the speed of your internet connection in terms of computing power and the memory storage it can access.

However, the future of the cloud is not just confined to computers, but in connecting industries spanning healthcare, driverless cars, artificial intelligence/virtual reality, smart homes and many more.

The emergence of cloud computing has been one of the most successful investment themes over the past decade, with Gartner forecasting $1trn in revenues by 2025. 

What is the methodology behind the construction of the product?  

The ETF is based on the ISE CTA Cloud Computing index. The index is a modified equal weighted index designed to track the performance of companies involved in the cloud computing industry and is a comprehensive, rules-based index designed to measure the performance of companies in the cloud computing industry.

To be included in the index, a company must meet stringent market cap, free float percentage and liquidity requirements.

A company must also be classified as a cloud computing company by the Consumer Technology Association. There are three categories cloud computing companies fall into:

• Software-as-a-Service (SaaS) – companies that deliver software applications over the internet enabling other companies to conduct their operations using the application

• Platform-as-a-Service (PaaS) – companies that deliver a platform for the creation of software in the form of virtualisation, middleware, and operating systems, which is then delivered over the internet

• Infrastructure-as-a-Service (IaaS) – companies which deliver cloud computing infrastructure, such as servers, storage, and networks, as an on-demand service.  

How does the ETF fit into the broader First Trust ETF range and what are your plans for the range in the future?  

At First Trust, we remain dedicated to identifying the strongest themes across industries and developing them into accessible investments for our investors.

We continue to provide new thematic ETFs enabling the better capture of powerful innovations and changes in portfolios.

Accessing the cloud computing phenomenon in a UCITS format has been driven by client demand (available in the US since 2011). In the US, we have more than 50 thematic funds, with the oldest dating back to 2006, highlighting our heritage in this space.

Our aim with our thematic offering is to continue to partner with our advisors to help develop long-term strategies, and create new solutions for clients’ investment requirements.

The fruits of this labour have been realised with the launch of three thematic UCITS ETFs this January, which aim to provide pure play access to clean energy, 5G and international internet themes. These launches demonstrate our commitment to being one of the global leaders in thematic investing. 

However, thematic investing only forms part of our wider ETF offering. We are the largest active ETF issuer in the world. For us, we want to be able to offer investors access to this growing range of funds in a UCITS format.

Within this segment, we are looking to grow our range of systematic fixed income UCITS ETFs, where predominantly our peers offer passive solutions, we are growing our suite of active solutions, again driven by client demand.   

Click here to find out more about the 2020 Specialist Investment Awards.

 

First Trust’s Cloud Computing UCITS ETF was the winner of the Best Specialist Technology ETF category at the Investment Week Specialist Investment Awards 2020.

The judges said the ETF provides good exposure to an exciting subset of technology, noting providing workers with the ability to work from home has become a strong support for the cloud computing thematic.
Here we speak to First Trust about the reasons behind the ETF launch, why cloud computing represents the next chapter in the innovation of the digital age and how the vehicle sits within the group’s wider range.  
Why did you launch the First Trust Cloud Computing UCITS ETF and what are you trying to offer investors? How could the ETF fit in their portfolios?  
First Trust have always been pioneers of thematic investing, offering investors access to some of the biggest global megatrends since 2006.
The cloud computing theme has been available via our US domiciled fund since 2011 so, for us, it was a natural move to offer our European investors a UCITS vehicle providing cost-effective exposure to a technology which is impacting our everyday lives.  
Thematic investing essentially allows investors to focus on the structural forces or themes that will play out over the longer-term, shaping and revising competitive landscapes, but importantly to look past short-term market noise and uncertainties.  
Our Cloud Computing ETF provides a forward-looking, longer-term approach to unlocking the power of the cloud. For investors’ portfolios, this ETF could act as a useful diversifier, a core technology or a large-cap US growth allocation or perhaps more broadly as pure play access to the cloud computing phenomenon.  
What do you see as the potential of this theme as an investment opportunity for investors?  
Continuing demand for remote access to data and online services has put cloud computing at the forefront of internet-based innovation. It represents the next chapter in the innovation of the digital age, capable of unlocking access to both future and emerging technologies.
The evolution of our reliance on the internet and the growing power of cloud computing has seen some of the world’s biggest companies continuing to invest in this space, effectively making it comparable to a utility.
The global pandemic, various lockdown measures and the majority of organisations that have been forced to work from home have simply accelerated a shift in this theme that was already happening.  
The cloud is tapping into massive swathes of our economy and society, affecting how we use financial services and many of the fundamentals of everyday life.
From watching a TV show on Netflix to scanning a QR code at your local, using the cloud has become effortless.
The screen you look at is no longer dependent on the computer it is attached to, it is only constrained by the speed of your internet connection in terms of computing power and the memory storage it can access.
However, the future of the cloud is not just confined to computers, but in connecting industries spanning healthcare, driverless cars, artificial intelligence/virtual reality, smart homes and many more.
The emergence of cloud computing has been one of the most successful investment themes over the past decade, with Gartner forecasting $1trn in revenues by 2025. 

What is the methodology behind the construction of the product?  
The ETF is based on the ISE CTA Cloud Computing index. The index is a modified equal weighted index designed to track the performance of companies involved in the cloud computing industry and is a comprehensive, rules-based index designed to measure the performance of companies in the cloud computing industry.
To be included in the index, a company must meet stringent market cap, free float percentage and liquidity requirements.
A company must also be classified as a cloud computing company by the Consumer Technology Association. There are three categories cloud computing companies fall into:
• Software-as-a-Service (SaaS) – companies that deliver software applications over the internet enabling other companies to conduct their operations using the application
• Platform-as-a-Service (PaaS) – companies that deliver a platform for the creation of software in the form of virtualisation, middleware, and operating systems, which is then delivered over the internet
• Infrastructure-as-a-Service (IaaS) – companies which deliver cloud computing infrastructure, such as servers, storage, and networks, as an on-demand service.  
How does the ETF fit into the broader First Trust ETF range and what are your plans for the range in the future?  
At First Trust, we remain dedicated to identifying the strongest themes across industries and developing them into accessible investments for our investors.
We continue to provide new thematic ETFs enabling the better capture of powerful innovations and changes in portfolios.
Accessing the cloud computing phenomenon in a UCITS format has been driven by client demand (available in the US since 2011). In the US, we have more than 50 thematic funds, with the oldest dating back to 2006, highlighting our heritage in this space.
Our aim with our thematic offering is to continue to partner with our advisors to help develop long-term strategies, and create new solutions for clients’ investment requirements.
The fruits of this labour have been realised with the launch of three thematic UCITS ETFs this January, which aim to provide pure play access to clean energy, 5G and international internet themes. These launches demonstrate our commitment to being one of the global leaders in thematic investing. 
However, thematic investing only forms part of our wider ETF offering. We are the largest active ETF issuer in the world. For us, we want to be able to offer investors access to this growing range of funds in a UCITS format.
Within this segment, we are looking to grow our range of systematic fixed income UCITS ETFs, where predominantly our peers offer passive solutions, we are growing our suite of active solutions, again driven by client demand.   
Click here to find out more about the 2020 Specialist Investment Awards.
 Read More– Investment Week

We offer dedicated services to multiple families to support their unique financial and legacy objectives. Our offering is comprised of customised solutions provided by advisors who have high-quality, proven expertise in wealth management and financial planning.

  • phone
  • email
  • address