Nasdaq Trade Talks - Gain Targeted Exposure to Emerging Cloud-Based Companies

Jill Malandrino: Welcome to Nasdaq Trade Talks. I’m your host Jill Malandrino, Global Markets Reporter at Nasdaq. Joining us at the MarketSite in Times Square, we have Jeremy Schwartz, the Global Head of Research over at WisdomTree. We're here to talk about gaining targeted exposure to the emerging cloud-based companies through WisdomTree’s newest ETF, WCLD. Jeremy, it is great to have you back with us in studio. Before we get to the cloud space—market outlook. It has been quite an interesting couple of weeks here.

Jeremy Schwartz: You know, everything is focused on the Fed, interest rates, trade war dynamics. If you look at the last few months, the market hasn't done much. Sort of back to where it was, and I think what's interesting about where this new ETF comes in people are looking for growth. Growth has been challenging. You're having a slower growth scenario. And so, I think people are just looking up and to be able to pay up for that growth because it’s a little hard to come by.

Jill Malandrino: All right, now the cloud sector. That's certainly where the growth is. Tell us why it's so exciting to be there right now.

Jeremy Schwartz: It is. When you think about what is happening in the world economy, software is really the future of tech, and cloud is the future of software. And so, I think it is one of those areas where you are getting the fastest growth rates within the entire technology sector. We have this index from the Nasdaq/Bessemer Venture Partners team. 50 companies equally weighted. The median growth rates in these companies, 30 percent a year. It is 4 times faster than the market as a whole. It is much faster than the traditional growth index. It is much faster than the tech sector as a whole. So, if you're looking for growth, the cloud space is really where you're getting the fastest growth.

Jill Malandrino: All right. Clearly investor interest because we're seeing some volume first day out.

Jeremy Schwartz: First day out.

Jill Malandrino: So, this ETF. What does it aim to do? Tell us about a couple of the top holdings.

Jeremy Schwartz: So, WCLD is tracking this Nasdaq BVP Emerging Cloud Index. It's looking at these up-and-coming cloud-based software companies. They are in terms of their profile. It is the faster growth part of that market. And so, you have to have 15 percent growth to get in, and then to stay and you have to have 7 percent growth. So, you can't just be a big up and coming cloud company with no growth. You have to maintain that fast growth to stay in, so that is one of the exciting things. The names are in there—they're things like Box, Twilio. Adobe is one the bigger companies that transformed to a cloud-based company. You're getting Shopify. A lot of cloud companies that are enabling software across the world there.

Jill Malandrino: And that's what's so great about this thematic ETF because it allows regular investors, such as you and I, to get exposure to a handful of these names that you can't buy individually or even here's an individual investor able to manage that and own your own portfolio, and that's what's great with these thematic ETFs. Why partner with Nasdaq? Why list on Nasdaq?

Jeremy Schwartz: Well, Nasdaq is one of the premier spots for tech companies generally. So, a lot of the tech companies are listed here on Nasdaq, and you've worked with Bessemer Venture Partners, an expert in cloud computing. So, they are one of the foremost venture capital firms identifying these early stage, private cloud companies. They brought a number of them to IPO, Nasdaq into the markets. And so, getting that insight how do you identify the true cloud computing companies with more than 50 percent revenue growth from the cloud, and then keeping that fast growth profile. That was a very unique partnership between Bessemer, Nasdaq, and now we're licensing the index. It’s a great opportunity.

Jill Malandrino: All right. Well, we're happy to have you on board. Look forward to seeing how this performance goes and interested in tracking this ETF. Thanks so much for joining us at MarketSite, and thank you for joining us on Trade Talks. I'm Jill Malandrino, Global Markets Reporter at Nasdaq.