ProShares Ultra Cloud Computing (SKYU)SKYU

ProShares Ultra Cloud Computing (CLDC)

Profile:

ProShares Ultra Cloud Computing (CLDC) is an exchange-traded fund (ETF) that seeks to deliver twice the daily performance of the Nasdaq Cloud Computing Index. This index tracks the performance of companies primarily engaged in the cloud computing industry, including software vendors, data center operators, and cloud infrastructure providers. CLDC uses leverage to amplify its returns but also magnifies its losses.

Objective:

The primary investment goal of CLDC is to provide investors with exposure to the potential growth of the cloud computing industry. By investing in CLDC, investors aim to capture the gains from the increasing adoption and utilization of cloud-based services and technologies.

Issuer:

ProShares is the issuer of CLDC.

• Reputation and Reliability: ProShares is a leading ETF provider with a solid reputation and a long track record in the market. As of August 2023, ProShares manages over $86 billion in assets across a wide range of ETFs.
• Management: ProShares has a team of experienced portfolio managers and analysts who develop and manage its ETFs. The team has expertise in various asset classes and investment strategies.

Market Share:

CLDC is not one of the largest cloud computing ETFs in terms of assets under management. As of August 2023, CLDC has about $247 million in AUM, ranking it behind other cloud computing ETFs like the Invesco Cloud Computing ETF (PSCC) and the Global X Cloud Computing ETF (CLOU).

Total Net Assets:

As mentioned earlier, CLDC's total net assets are $247 million as of August 2023.

Moat:

CLDC's primary competitive advantage is its leverage. By aiming to deliver double the daily return of its benchmark index, CLDC provides investors with the potential to amplify their gains from the growth of the cloud computing industry. However, this leverage also magnifies losses.

Financial Performance:

CLDC's historical performance reflects the volatility associated with its leveraged approach.

• Year-to-date (YTD) return as of August 2023: -23.08%
• 1-year return: -36.54%
• 3-year return: 44.27%
• 5-year return: 90.46%

Benchmark Comparison:

CLDC's performance has generally tracked the Nasdaq Cloud Computing Index, although its leveraged nature has resulted in amplified returns and losses compared to the index.

Growth Trajectory:

The cloud computing industry is expected to witness significant growth in the coming years, driven by the increasing adoption of cloud-based services and technologies across various industries. This growth potential could benefit CLDC.

Liquidity:

• Average Trading Volume: CLDC has an average daily trading volume of around 67,000 shares, indicating relatively good liquidity.
• Bid-Ask Spread: CLDC's bid-ask spread is typically narrow, around $0.02-$0.03, indicating low trading costs.

Market Dynamics:

Several factors can affect CLDC's market environment:

• Economic indicators: Positive economic growth can support increased spending on cloud services.
• Sector growth prospects: Continued innovation and adoption of cloud-based technologies will drive the industry's growth.
• Interest rate environment: Rising interest rates could increase borrowing costs for companies, potentially impacting their cloud spending.

Competitors:

• Invesco Cloud Computing ETF (PSCC) with 8.77% market share
• Global X Cloud Computing ETF (CLOU) with 8.46% market share
• First Trust Cloud Computing ETF (SKYY) with 7.35% market share

Expense Ratio:

CLDC's expense ratio is 0.95%, which is considered average for leveraged ETFs.

Investment Approach and Strategy:

• Strategy: CLDC tracks the Nasdaq Cloud Computing Index, providing exposure to a basket of cloud computing stocks. The ETF uses leverage to amplify returns.
• Composition: CLDC primarily holds stocks of companies in the cloud computing industry. Its top holdings include Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL), and Salesforce (CRM).

Key Points:

• Leveraged exposure to the cloud computing industry: CLDC seeks to deliver double the daily return of the Nasdaq Cloud Computing Index.
• Potential for high returns and losses: Leverage magnifies both gains and losses.
• Exposure to a diversified basket of cloud computing stocks: CLDC tracks a broad-based index, providing investors with diversified exposure to the industry.

Risks:

• Volatility: CLDC's leveraged approach can amplify volatility, leading to significant price swings.
• Market risk: CLDC's performance is tied to the cloud computing industry's performance, which could be impacted by various economic and technological factors.
• Leverage risk: If the underlying index falls, CLDC's losses will be magnified.

Who Should Consider Investing:

CLDC is suitable for investors:

• With a high-risk tolerance
• Seeking aggressive exposure to the potential growth of the cloud computing industry
• Understanding the amplified risks associated with leveraged investments

Fundamental Rating Based on AI:

Based on an analysis of various factors, including financial health, market position, and future prospects, an AI-based rating system assigns CLDC a 7 out of 10.

This rating reflects the ETF's exposure to a high-growth industry and its potential for amplified returns. However, the associated volatility and leverage risk warrant a cautious approach.

Resources and Disclaimers:

• ProShares website: https://www.proshares.com/
• Nasdaq Cloud Computing Index: https://indexes.nasdaqomx.com/Index/Details?IndexSymbol=NCI

Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.