Core Viewpoint - First Trust Cloud Computing ETF (SKYY) provides thematic exposure to companies involved in cloud services, capturing trends in enterprise IT modernization and software delivery models [1] Group 1: Investment Proposition - SKYY targets companies that develop, enable, or deliver cloud services across various segments including infrastructure, platforms, and software [1] - The portfolio is primarily composed of technology and communication services firms, which may exhibit varying growth, profitability, and capitalization profiles [1] - SKYY serves as a satellite investment for growth-oriented investors, offering targeted participation in digital transformation and innovation [1] Group 2: Market Dynamics - The fund is likely to perform well when long-duration growth assets are favored, corporate IT budgets increase, and subscription models gain traction [1] - Potential challenges for SKYY include rising discount rates, cyclical spending pauses, and competitive disruptions in key subsectors [1] Group 3: Risk Considerations - A specific risk associated with SKYY is thematic concentration, which can lead to increased idiosyncratic risk due to narrow leadership or rapid product obsolescence [1]

Core Viewpoint - VanEck Vectors Semiconductor ETF (SMH) provides targeted exposure to leading U.S.-listed semiconductor companies, focusing on long-term growth drivers in various sectors while recognizing the cyclical nature of the industry [1] Group 1: Investment Strategy - The ETF concentrates on established, highly liquid semiconductor firms to capture growth in computing, automotive, cloud, mobile, and AI sectors [1] - SMH can serve as a growth-oriented satellite in multi-asset portfolios, a thematic investment in silicon supply chains, or a focused expression of views on automation and data proliferation [1] Group 2: Market Sensitivity - The fund is sensitive to global manufacturing and capital expenditure trends, benefiting from expansions in these areas and new computing paradigms that drive chip demand [1] - SMH may face challenges during inventory corrections, export restrictions, or funding squeezes for capacity [1] Group 3: Portfolio Characteristics - The portfolio typically reflects high quality in profitability and scale, but is also characterized by elevated volatility common in innovation-driven industries [1] - A notable risk is the concentration in a limited number of dominant issuers, which could increase potential drawdowns if market leadership falters [1]