On July 5th, First Trust launched an exchange traded fund (ETF) designed to help investors capitalize on the growing market for cloud computing. I'd be excited about this sign of maturity for the market if the fund let you invest in the companies that are truly driving cloud computing, but most of them aren't publicly traded. Now don't get me wrong, there are clearly some cloud leaders in the ISE Cloud Index, such as Amazon, saleforce.com and Netflix, but many of the stocks in this fund are traditional infrastructure players who get a fraction (at most) of their revenues from cloud computing, such as Polycom, Teradata and Iron Mountain. The fund is a mix of cloud leaders, arms dealers and companies who are directionally heading toward the cloud – dare I say "cloudwashing" their traditional revenue streams. 

The bigger question, though, is should anyone invest in this fund? Ignore the name and why not. Many of these stocks are market leaders in their respective areas, so if you are looking for a good technology fund, this is probably as good as any. 

Should you invest in it as a vehicle to capitalize on the cloud trend? That's where it gets questionable. The above point should be a factor but second should be what you are expecting as return from your cloud investment. While the hype suggests that cloud is the hot trend and media such as Nick Carr's book The Big Switch suggest all IT is going this way, we'd recommend taking a more skeptical approach. As I mentioned on CNBC last week, our research shows that while most enterprises are starting to invest in the cloud, they are most certainly not shifting over to it in a big way any time soon. And in fact, we'd argue that most applications have no business being in the cloud

A lot of the more recent hype has been around private clouds, which would explain why so many enterprise infrastructure and software players are in this ETF, but again our data shows that this is a long haul for enterprises. In fact, according to our data, only about 6% of enterprises are even ready to manage a private cloud. The majority of enterprises who say they have one actually just have a well-run server virtualization environment. That's certainly not a bad thing, and they should be proud of how far they have come, but there is a clear line between this and a private cloud.

If you want to capture the cloud sweet spot, look to invest in software-as-a-service companies, as this segment of cloud computing is the most mature, according to our TechRadar research (look for an update to this analysis in the fall) and thus seeing the strongest enterprise adoption. But even here, I'd temper your expectations on growth percent expected. If cloud stocks start to show growth well ahead of real market growth, it might be time to step away and take your profits.