Episode summary
ETF of the Moment: Software Isn't Dead, Yet | Trillions
Trillions
· · 13 min · Hosts: Joel Weber, Eric Balchunas · Guests: Andrey Yapp
Summary
The episode argues that the “SaaSpocalypse” may have been overdone and that software-linked ETFs are starting to recover as second-quarter earnings came in stronger than feared. The hosts focus on Themes Cloud Computing ETF, ticker CLOD, as a small but telling example of investors rotating back into software exposure after an early-year selloff tied to AI worries, spending uncertainty, and a broader risk-off mood.
Andrey Yapp says the sector was hit by three pressures: fears that AI would shrink software demand, concerns that software firms were spending heavily on AI with unclear returns, and a weak macro backdrop. But he says the numbers have challenged that narrative: about 70% of the ETF’s holdings are software companies and roughly 93% of those beat earnings expectations. The hosts frame CLOD as a small, somewhat rough-edged ETF that may still be useful because it captures the overlap between cloud computing and software.
The discussion also stresses that CLOD is tiny at about $2 million to $2.5 million in assets, so investors may need to use limit orders. Even so, the hosts see value in screening small, newer ETFs before they become obvious, especially when the underlying companies appear to be outperforming expectations.
Key takeaways
- Andrey Yapp says software fears were driven by AI-driven headcount concerns, AI spending uncertainty, and a risk-off macro backdrop, not by fundamentals alone.
- Yapp says about 70% of CLOD’s holdings are software companies, and roughly 93% of those beat earnings expectations.
- The hosts say CLOD has risen about 20% since the end of the first quarter, even though it is still flat year to date.
- Joel Weber and Eric Balchunas argue cloud-computing ETFs can be a cleaner way to capture software exposure because the two are highly interconnected.
- The hosts note CLOD is very small, with about $2 million in assets, so limit orders may be prudent.
Notable quotes
“So the narrative that software is dead uh I think the numbers kind of defied that”
“when we looked at the top 20 holdings it accounted for about 80% of the portfolio's weight”
“about 93% of those companies actually beating earning expectations”
“it has 2 million in assets. So it didn't really have any assets to get”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. — Welcome to Trillions. I'm Joel Weber. — And I'm Eric Balunis. — Eric, we do these episodes ETF of the moment regularly. Now, there's a little bit of art and science that goes into it. What does that entail?
Yeah, we do this because we found people like tickers. And so, a way to deliver tickers is looking at new launches, which we do. And here's one of just we call it ETF of the moment.
We write it once a month. And we basically derive it from both quantitative and qualitative means. So, we look at okay, we want to catch a wave before it's a wave.
So, we look for swells out in the ocean. How do you get a swell? You look at percent short-term return versus its longerterm average.
Like, is it having a little bit of a short-term moment? And then we look at volume in the short term versus its rolling average. Is it having a little more popularity?
So, if it's seeing a little recent runup in volume and return, we're saying, okay, people are it's happening and people are noticing it. Then we look at that list and we say, okay, which one of these is just most interesting and connected to news right now? And so the one we're going to go over this week has to do with the software resurrection.
You know, a lot of people thought software was going to be u
I was one of them. I thought AI killed software earlier this year. — That they were calling the SAS apocalypse. You heard that? — I thought that was a great name. — Yeah. Um — And frankly, I thought it killed it and and it was still down.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- cloud computing etf
- ai software fears
- etf performance
- earnings outlook
- saas spending
Companies and tickers mentioned
- CLOD
- Themes Cloud Computing ETF
Watch the episode
Watch “ETF of the Moment: Software Isn't Dead, Yet | Trillions” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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