First Trust cross-lists cybersecurity and cloud computing ETFs on Xetra

Oct 13th, 2020 | By | Category: Equities

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First Trust Global Portfolios has cross-listed two ETFs into Germany providing exposure to the cybersecurity and cloud computing investment themes.

First Trust cross-lists cybersecurity and cloud computing ETFs on Xetra

Rupert Haddon, Managing Director, Head of Sales at First Trust Global Portfolios.

The First Trust Nasdaq UCITS Cybersecurity ETF (CBRS GY) and First Trust Cloud Computing UCITS ETF (SKYE GY) have listed on Deutsche Börse Xetra and come with expense ratios of 0.60%.

The listings trade in euros and income is capitalized.

Rupert Haddon, Managing Director, Head of Sales at First Trust Global Portfolios, said, “We are delighted to be expanding our product range on the Deutsche Börse Xetra, providing German investors local access to these innovative next-generation ETFs.

“As the world is becoming increasingly digitised and we continue to witness an unprecedented reliance on internet and digital solutions, the critical importance of cloud computing and cybersecurity has never been higher. With these listings we are pleased to be further increasing access to these investment megatrends, offering wealth managers and their investors the opportunity to capitalise on this exceptional growth story.”

Cybersecurity

The First Trust Nasdaq Cybersecurity UCITS ETF tracks the Nasdaq CTA Cybersecurity Index which includes firms listed globally that are “primarily involved in the building, implementation, and management of security protocols applied to private and public networks, computers, and mobile devices, in order to provide protection of the integrity of data and network operations”.

Firms will be eligible for inclusion if they are classified as a cybersecurity company, as determined by the Consumer Technology Association (CTA), a standards and trade organization for the consumer technology industry in the United States.

To ensure sufficient liquidity, the index only includes securities with a minimum market cap of $250m, a three-month average daily dollar trading volume (ADDTV) of at least $1m, and a free float greater than 20%. Companies that meet the criteria are weighted according to their three-month ADDTV with a single security cap of 6%. The index is reconstituted semi-annually and rebalanced quarterly.

The fund debuted in Europe on the London Stock Exchange in June and has already gathered approximately $40m.

Cloud computing

The First Trust Cloud Computing UCITS ETF is linked to the ISE CTA Cloud Computing Index which selects its constituents from a pool of US-listed securities, including American Depository Receipts, that have at least $500m in assets under management, a minimum three-month ADDTV of $5m, and a free float greater than 20%. Eligible firms must be classified as a cloud computing company as defined by the CTA.

Securities are classified according to three business segments: Infrastructure-as-a-Service (IaaS), companies that deliver infrastructure such as servers, storage, and networks as an on-demand service; Platform-as-a-Service (PaaS), companies that deliver platforms for the creation of software in the form of virtualization, middleware, and operating systems; and Software-as-a-Service (SaaS), companies that deliver software applications over the internet.

Each security is then allocated a ‘Cloud Score’ based on which business segments the firm operates in – IaaS firms receive a score of three, PaaS firms a score of two, and SaaS firms a score of one. A firm that conducts significant operations in all three segments will receive a maximum score of six. Constituents are weighted according to their Cloud Scores subject to a maximum weight of 4.5%.

The fund launched in Europe in February 2019. It houses around $200m AUM.

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