With data breaches and cyber warfare on the rise, a new exchange traded fund offers investors an avenue for profiting with companies looking to prevent cyber crimes.
The PureFunds ISE Cyber Security ETF (NYSEArca: HACK) debuted Wednesday, courtesy of ETF Managers Group’s Factor Advisors unit. HACK is the first ETF “to hold shares of public companies that are heavily engaged in the emerging industry of protecting critical cyber infrastructure,” according to a statement issued by PureFunds.
HACK benchmarks to the ISE Cyber Security Index, “which tracks the performance of companies actively engaged in providing services for cyber security and for which cyber security business activities are a key driver of their business model. These cyber security services are designed to protect computer hardware, software, networks and data from unauthorized access, vulnerabilities, attacks and other security breaches,” according to the statement.
The index includes twenty-nine constituent companies, including VASCO Data Security International Inc. (NasdaqGS: VDSI), Palo Alto Networks Inc. (NasdaqGS: PANW), Symantc Corp. (NasdaqGS: SYMC), Juniper Networks Inc. (NasdaqGS: JNPR), FireEye Inc. (NasdsaqGS: FEYE), and Splunk Inc. (NasdaqGS: SPLK), according to ISE ETF Ventures.
VASCO, Juniper, Palo Alto Networks Dow component Cisco Systems (NasdaqGS: CSCO) and Imperva (NYSE: IMPV) combine for 29.2% of the index’s weight.
HACK is home to 24 stocks and charges 0.75% per year, according to PureFunds data.
Recently, major U.S. companies, such as Home Depot (NYSE: HD), J.P. Morgan Chase (NYSE: JPM) and Target (NYSE: TGT) have been victimized by data breaches, underscoring the importance of products and services provided by the companies featured in HACK.
Last month, J.P. Morgan Chase CEO Jamie Dimon said the banking giant will likely double its cyber security spending to $500 million within the next five years.
“In the United States cybersecurity market, network security segment is expected to account for the largest segment during the next decade. Data security segment is set to account for 28.4% of the market whereas cloud security segment is projected to grow at a CAGR of 8.33% over the forecast period,” according to Strategic Defence Intelligence.
ISE Cyber Security Index
ETF Trends editorial team contributed to this post.
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