Evolve Funds has launched the first ETF in Canada to provide pure-play exposure to companies operating in the cloud computing space.
Raj Lala, President and CEO of Evolve Funds.
The Evolve Cloud Computing Index Fund has listed on the Toronto Stock Exchange in Canadian dollars and is available in CAD-hedged (DATA CN) and unhedged (DATA.B CN) share classes.
Raj Lala, President and CEO at Evolve Funds, said: “The pandemic has increased the need for cloud computing in the midst of work from home mandates, and 2020 rounded out what was already a vastly advancing decade for the sector.
“We all rely heavily on the cloud in both our personal and professional lives, and this demand is reflected in the growth we are seeing in the sector. The launch of DATA marks another Canadian ETF first for investors and helps round out an already impressive disruptive innovation suite from Evolve.”
Methodology
The fund is linked to the Solactive Global Cloud Computing Index which selects its constituents from an initial universe of developed market stocks with market capitalizations greater than $100 million and average daily trading values above $2m.
From this universe, companies that are classified according to the FactSet Revere Business Industry Classification System as operating within various known fields pertaining to cloud computing are eligible for selection. This includes companies active in areas such as systems development, hardware infrastructure, network software, communications services, and data storage.
The 50 largest eligible stocks are selected to form the final index. Constituents are weighted by market capitalization subject to a cap of 7.5% per security. Index rebalancing occurs on a quarterly basis.
As of 8 January 2021, nearly 80% of the index’s exposure was allocated to stocks from the US with the next largest country weights being Canada (7.0%), Germany (6.5%), and Israel (1.8%). Tech stocks account for almost three-quarters (72.5%) of the index weight, while a quarter (25.8%) is dedicated to the communications sector.
The index’s top ten holdings feature several household names including Alphabet (8.7%), Oracle (7.5%), Microsoft (7.4%), Amazon (7.0%), Shopify (6.4%), and salesforce.com (6.1%).
The fund comes with a management fee of 0.60%.