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Top 4 Cloud Computing ETFs For 2021

Cloud computing, one of 2020's top performing themes, could repeat in 2021.

One of the biggest beneficiaries of the COVID-19 pandemic has been the cloud computing space. Companies have been increasingly adopting cloud services for their businesses and many traditional tech companies are now offering cloud services of their own.

It's been a growing industry for some time, but the coronavirus has really accelerated the trend in 2020. As people work from home and do more of their shopping online, the demand for cloud services continues to grow.

ETFs that focus on these cloud companies have done especially well in 2020. Individual ETF returns have varied depending on what type of sector exposure they're targeting, but the best performing fund is up more than 100% on the year.

With cloud demand expected to remain strong, that growth could continue to carry forward into 2021.

Here are 4 top cloud computing ETFs to consider in 2021.

First Trust Cloud Computing ETF (SKYY)

The first and largest cloud ETF, SKYY takes a broad approach to which companies qualify for inclusion in the fund, but it gives greater weights to those companies with greater exposure to the industry.

The fund has a heavy large-cap focus with top holdings including Oracle, Microsoft, Amazon, Alibaba and Alphabet.

Global X Cloud Computing ETF (CLOU)

CLOU requires companies to have at least 50% revenue exposure to any of a number of cloud computing sub-industries.

Components include traditional cloud businesses as well as managed server storage space and data center REITs.

WisdomTree Cloud Computing ETF (WCLD)

WCLD tracks an equally weighted index of around 50 cloud companies and is the best performing cloud ETF year-to-date with a gain of more than 120%.

In order to qualify, new components must be achieving at least 15% annual revenue growth, or 7% for existing components, emphasizing the fund's growth focus.

Wedbush ETFMG Global Cloud Tech ETF (IVES)

Formerly the ETFMG Prime Drone Economy ETF, IVES switched earlier this year to focus on the "undercover gems" of the cloud economy.

It focuses on companies engaged in providing infrastructure, equipment, connectivity, data back-up and storage services.