No, it is not one of the several dedicated South Korea ETFs trading in the U.S., but rather the PureFunds ISE Cyber Security ETF (NYSEArca: HACK).
When HACK debuted just over a month ago, naysayers may have been apt to say the new ETF was too narrowly focused. However, while HACK is unlikely to ever the standard and arguably boring broad markets that line so many portfolios, the new fund has gained instant credibility and assets in the wake of hacking imbroglio surrounding Sony’s (NYSE: SNE) “The Interview.” [New ETF Looks to Stop the Hackers]
For now, it looks like “The Interview” will not be widely viewed by moviegoers. So perhaps it is not a coincidence that HACK jumped 4.7% last week to close at the highest levels of its short life. Nor is it a coincidence that HACK has added over $24.3 million in new assets this month. As of Dec. 9, HACK had $53.4 million in assets under management, which is an enviable start for any new ETF.
Underscoring the potential HACK has to continue cementing its status as a solid satellite tech ETF trade is that Sony is far from the only marquee company to suffer a major data breach.
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.
In October, 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.
Speaking of HACK’s long-term potential, each year cyber security incidents cost the global economy $400 billion and the rate of such incidents has been growing at a compound annual growth rate of 66% since 2009, according to PureFunds data.
According to the General Accounting Office, the Federal Government alone spent $938 million on cyber security in 2000. In 2015, the Federal Budget allots for $13 billion on cyber security spending, notes PureFunds. Said another way, the controversy surrounding “The Interview” is good for calling attention to HACK and creating a valid, albeit short-term trading opportunity in the ETF. However, the growth of cyber security incidents and the spending required to prevent against future attacks bode well for HACK’s long-term outlook.
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 PureFunds, which also sponsors the PureFunds ISE Junior Silver Small Cap Miners/Explorers ETF (NYSEArca: SILJ). [An ETF for the Booming Cyber Security Market]
VASCO (NasdaqGS: VDSI), Juniper (NasdaqGS: JNPR), Palo Alto Networks (NasdaqGS: PANW) Dow component Cisco Systems (NasdaqGS: CSCO) and Imperva (NYSE: IMPV) combine for 30.3% of the index’s weight.
HACK is home to 26 stocks and charges 0.75% per year, according to PureFunds data.
PureFunds ISE Cyber Security ETF
