WCLD - Software Investing: Riding The Rollercoaster

2024-06-07 10:30:00 ET

Summary

• The WisdomTree Cybersecurity Fund and WisdomTree Cloud Computing Fund have experienced high volatility, with an annualized standard deviation of roughly 28% compared to the S&P 500 Index’s annualized volatility of 17%.
• The performances of WCBR and WCLD have been influenced by changes in interest rates, with low rates in 2021 boosting valuations, rate hikes in 2022 challenging returns and rate cut expectations in 2023 driving share prices higher.
• Despite concerns about valuations and volatility, the long-term potential of cybersecurity and cloud computing remains strong due to increasing AI adoption and the need for related infrastructure.

By Christopher Gannatti, CFA

Within WisdomTree's suite of thematic equity strategies, both the WisdomTree Cybersecurity Fund ( WCBR ) and WisdomTree Cloud Computing Fund ( WCLD ) are tracking indexes that focus largely on software-as-a-service (SaaS) companies. There is an overall feeling of concern as we reach the halfway mark in 2024, as we are receiving questions from investors and seeing a range of articles discussing the slowing growth rates in these types of stocks....

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