The PureFunds ISE Cyber Security ETF (NYSEArca: HACK) has not been immune to the shocks sent through global financial markets by China, Greece and Puerto Rico, but even with a loss of 8.6% over the past week, HACK is up 16.8% this year.
That is good enough to make it the top-performing non-leveraged technology ETF and the ninth-best sector ETF overall. The eight non-leveraged ETFs ahead of HACK this year are biotechnology and healthcare funds.
Thanks to a spate of cyber security breaches and hedge funds rushing to own shares of HACK’s various holdings, at least one issuer of inverse and leveraged ETFs is looking to offer leveraged equivalents of HACK. Direxion, the second-largest issuer of inverse and leveraged ETFs, has filed plans with the Securities and Exchange Commission for the Direxion Daily Cyber Security Bull 2X Shares and the Direxion Daily Cyber Security Bear 2X Shares.
Those ETFs, if they come to market, would seek to deliver twice the daily returns and double the daily inverse returns of the ISE Cyber Security Index, HACK’s underlying index.
HACK’s index “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.
Home to 31 stocks, HACK’s holdings include Palo Alto Networks (NasdaqGS: PANW), Infoblox (NasdaqGS: BLOX), IntraLinks (NYSE: IL), Guidance Software (NasdaqGS: GUID), Radware (NasdaqGS: RDWR) and Vasco Data Security (NasdaqGS: VDSI). [The Rise of the Cyber Security ETF]
Direxion is not the first issuer to file plans for another cyber security ETF. First Trust, the sixth-largest U.S. issuer of exchange traded funds, has filed plans for a cyber security ETF, the First Trust NASDAQ CEA Cybersecurity ETF.
While Direxion’s leveraged offerings could easily find a following among active traders, competing head-to-head with HACK, as the First Trust cyber security ETF would do, could prove to be a tough competition for new arrivals.
HACK’s first mover advantage is cemented. As a result, the fund has superior brand recognition in the cyber security fund space. That much is confirmed by the ETF’s nearly $1.2 billion in assets under management, a total it took HACK less than eight months of trading to reach. [Cyber Security ETF tops $1 Billion in Assets]
PureFunds ISE Cyber Security ETF
