Should You Invest in a Cloud Computing ETF?

Should You Invest in a Cloud Computing ETF?

We tackle a question by a reader on ETFs.

Why bother stock picking when it is easier to pick a Cloud Computing ETF on a buy and forget basis?

You’re right.

I think the answer is really, what do you want to do? And how do you want to spend your time, right?

So you can pick a cloud ETF and get diversification. There are some checks you should do, to make sure that the cloud ETF, which you choose is a good one.

And I think that is a judgment you have to make.

Now, the thing about investing in ETFs is that you have to accept the fact that, because you want to be hands-off.

If the cloud ETF falls, you should not panic and should continue investing in it, right?

So the whole idea of buy and forget, or just do a dollar cost averaging (DCA), is to be consistent in doing it.

I think if you can do it then, a cloud ETF would be a good option for you.

But what I believe is that our stock picking. We have shown over time that we are able to do well and to beat the market.

And we’re hopeful that we are able to do better than the market.

So I just want to make sure that you understand that cloud ETFs, even though they are diversified, it doesn’t mean that it is a less volatile index itself.

Whether you’re talking about STI or S&P 500 which has 500 companies, the index can fall 10%, every 11 months for the S&P 500.

So, there will still be volatility and you have to be comfortable with this volatility because if you’re buying and being hands-off, then you do not know what are the components which make up the ETF and therefore you should be comfortable and keep on investing and trust the process.

Okay. So the choice of cloud ETF is important and if it works for you then, you know, by all means, go ahead.

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Disclaimer: Chin Hui Leong does not own any of the companies mentioned.