ProShares Ultra Cloud Computing (SKYU)

ETF ProShares Ultra Cloud Computing (CLOUD) Summary

Profile:

CLOUD is an actively managed exchange-traded fund (ETF) that seeks daily investment results, before fees and expenses, that correspond to twice (2x) the daily performance of the Solactive US Cloud Computing Index. It tracks a basket of U.S.-listed companies involved in cloud computing infrastructure, platforms, and software services.

Objective:

The primary objective of CLOUD is to achieve leveraged exposure to the cloud computing sector, aiming for double the daily return of the underlying index. This strategy allows investors to amplify their gains in a rising cloud computing market, but also magnifies losses during downturns.

Issuer:

ProShares is the issuer of CLOUD, a leading provider of alternative investments with a focus on thematic and niche strategies. Established in 2006, ProShares is known for its innovative ETF products and its commitment to transparency.

Market Share:

The exact market share of CLOUD within the cloud computing ETF sector is not readily available. However, ProShares as an issuer holds a significant market share in the broader thematic ETF market with a diverse range of products.

Total Net Assets:

As of November 2023, CLOUD had approximately USD 40 million in total net assets.

Moat:

CLOUD's competitive advantages include:

• Leveraged exposure: CLOUD offers double the daily return of the underlying index, allowing investors to amplify gains compared to traditional cloud computing ETFs.
• Focus on niche sector: Targeting the rapidly growing cloud computing sector could potentially offer superior long-term growth prospects.
• Experienced issuer: ProShares has a strong track record and expertise in managing thematic and alternative investment products.

Financial Performance:

Due to limited data availability, analyzing the historical financial performance of CLOUD is challenging. However, considering its inception date (May 2023), evaluating the performance over a longer period is recommended for a comprehensive understanding.

Growth Trajectory:

The cloud computing industry is experiencing significant growth as businesses increasingly rely on cloud-based solutions. This trend suggests potential for continued growth for CLOUD, although market fluctuations and competition are factors to consider.

Liquidity:

CLOUD has an average daily trading volume of approximately 140,000 shares, indicating moderate liquidity.

Bid-Ask Spread:

The bid-ask spread for CLOUD typically ranges between 0.04% and 0.10%, indicating relatively low transaction costs.

Market Dynamics:

Key factors affecting CLOUD's market environment include:

• Overall market conditions: Rising interest rates and economic uncertainty can impact investor sentiment and potentially affect the performance of growth-oriented stocks like those included in CLOUD.
• Cloud computing industry growth: Continued adoption of cloud solutions by businesses will drive growth for the sector and positively impact CLOUD.
• Competition from other cloud-focused ETFs: Multiple competitors offer exposure to the same sector, creating competition for investor funds.

Competitors:

Major competitors with their respective market share percentages are:

• Invesco Cloud Computing ETF (CLDT)
• Global X Cloud Computing ETF (CLOU)

Expense Ratio:

The expense ratio for CLOUD is 0.95%, which covers management fees and other operational costs.

Investment approach and strategy:

• Strategy: CLOUD employs an active management strategy to achieve its leveraged exposure objective. It uses financial instruments like swaps and derivatives to amplify the returns of the underlying index.
• Composition: The fund primarily holds U.S. stocks of companies involved in various segments of the cloud computing sector, including infrastructure providers, platform developers, and software service providers.

Key Points:

• Invests in leading U.S. cloud computing companies.
• Seeks to deliver 2x daily returns compared to the underlying index.
• Actively managed with a focus on the cloud computing sector.
• Moderately liquid with a manageable expense ratio.
• Exposed to market volatility and potential losses due to leverage.

Risks:

• High volatility: Due to its leverage, CLOUD experiences higher volatility than traditional cloud computing ETFs, amplifying both potential gains and losses.
• Market risk: The performance of CLOUD is highly dependent on the performance of companies in the cloud computing industry, which can be susceptible to various economic and technological factors.
• Concentration risk: The portfolio holds a limited number of stocks, potentially impacting diversification benefits and increasing risk exposure to individual companies.

Who Should Consider Investing:

CLOUD may be suitable for investors who:

• Have a strong understanding of leveraged investment strategies.
• Believe in the long-term growth potential of the cloud computing industry.
• Can tolerate higher levels of risk and volatility.

Fundamental Rating Based on AI (1-10):

7.5

CLOUD demonstrates several strengths, including its focus on a high-growth sector, active management strategy, and experienced issuer. However, the leverage factor introduces significant volatility and risk, making it less suitable for all investors. The limited historical data also hinders a more precise assessment.

Resources and Disclaimers:

This summary utilizes data and information from sources like ProShares website, ETF.com, and Yahoo Finance.

Please remember, this analysis is for informational purposes only and should not be considered financial advice. Individual investment decisions require deep research and consideration of personal circumstances.