ProShares On-Demand ETF (OND)

The ProShares On-Demand ETF (OND) holds shares in companies whose business hinges on delivering software, storage, and computing power on demand — whether as Amazon Web Services renting servers by the hour, Salesforce distributing CRM software over the internet, or smaller cloud specialists providing data warehousing and analytics. It is a thematic fund, not bound to a formal index, and it tilts the portfolio toward firms whose revenue streams are recurring and subscription-based rather than transactional and one-time.

The fund’s angle

OND does not track a published index in the traditional sense; instead, ProShares uses an in-house methodology to identify and weight companies in the on-demand software and infrastructure space. The screening captures both mega-cap leaders — Amazon, Microsoft, and Salesforce sit in the portfolio — and smaller, more niche players focused on specific cloud applications or vertical markets. The result tilts heavily toward technology, but the explicit framing is thematic: companies whose survival and growth depend on customers consuming their services continuously rather than buying a product once and installing it locally.

This reflects a profound shift in how software and infrastructure are sold. Twenty years ago, companies bought a licence to run Oracle databases on their own servers; today they rent cloud capacity from Google or Amazon by the minute. That shift from capital expenditure to operating expense has driven a large cohort of companies and investors see it as a durable long-term trend.

Why OND exists and what it is not

The fund targets investors who believe cloud adoption is still far from peaking — that capital spending on traditional IT infrastructure will continue migrating to the cloud, that new cloud-native companies will keep proliferating, and that established players like Microsoft will keep gaining ground as they compete for share. It is a bet on a structural transformation, not on any one company’s quarterly earnings.

OND is not a pure-play index tracker. It is more flexible than that, and ProShares can shift weightings and add or remove holdings as the cloud landscape evolves. It is also not a tech fund more broadly — it screens specifically for on-demand characteristics, so it excludes chipmakers, semiconductor equipment firms, or traditional software vendors who have not migrated to cloud delivery. That focus makes it narrower and more directional than a diversified technology ETF.

The holdings and their character

Typical holdings span a wide range. Amazon and Microsoft — both cloud giants despite their other operations — are usually top positions. Salesforce, which pioneered the cloud CRM model, is typically held. Next are the infrastructure and data specialists: Datadog (monitoring), Okta (identity and access), Zoom (video conferencing), CrowdStrike (cybersecurity delivered as a service), and dozens of others. Many are profitable now but have been valued on growth expectations for years; others remain high-burn operations betting on scale.

The portfolio has a strong tilt toward higher-valuation, higher-growth stocks. Cloud companies trade on the assumption that they will compound growth for years to come, so their share prices often embed optimistic revenue forecasts. That makes OND sensitive to shifts in interest-rate expectations and investor sentiment toward growth stocks.

Concentration and volatility

OND is not a diversified fund. By selecting only on-demand, subscription-driven software and infrastructure firms, it forgoes exposure to many other kinds of companies entirely. Its top ten holdings typically represent a third or more of the fund’s value. That concentration amplifies both gains and losses. A downturn that hits cloud stocks particularly hard — rising interest rates reducing appetite for growth, or a recession pausing digital transformation budgets — can steepen OND’s decline relative to the broader market.

Volatility has been significant. Tech, especially high-growth cloud, swings sharply with sentiment. OND has experienced 20–30% drawdowns in periods where the broader market falls less.

Costs and liquidity

OND’s expense ratio is typically 0.7–0.75%, meaningfully higher than a broad index fund but reasonable for a thematic strategy that requires active curation. The fund trades on the NASDAQ and is reasonably liquid, though not as much as mega-cap ETFs.

How to understand OND as an investment

The core question is structural: do you believe cloud adoption and on-demand software delivery are still accelerating and will continue driving company growth and margins for years? If yes, OND is a way to gain exposure to that thesis. If you are sceptical that the shift is already priced in, or if you believe other economic forces will constrain growth, the fund’s inherent leverage to cloud bulls becomes a liability.

Start by reading ProShares’ fund prospectus and fact sheet to see the current holdings and methodology. Examine the top ten positions — are they companies you recognize as cloud-native, and do you understand their business models? Compare OND’s performance to a broad technology index ETF (like QQQ) and to the broader market (like SPY) across different time periods; the fund should outperform in cloud booms but lag in cloud downturns. Reflect on your own thesis: is cloud computing still in its infancy, or is it mature, with most of the gains already captured in stock prices?