The Undaunted Rise of the Cyber Security ETF

Monday was a lousy day for U.S. stocks, but as it has a habit of doing, the PureFunds ISE Cyber Security ETF (NYSEArca: HACK) ignored the broader market’s nasty tape to close higher.

In fact, HACK added almost 1% on better than double the average daily volume to hit another all-time high bring its year-to-date gain to 22%. That makes HACK one of this year’s top-performing non-healthcare ETFs.

As it seemingly has since it came to market in November, HACK had the wind at its back Monday thanks in part to a Goldman Sachs report highlighting hedge funds’ affinity for cyber security stocks. Hedge funds love cyber security names such as Infoblox (NasdaqGS: BLOX), IntraLinks (NYSE: IL), Guidance Software (NasdaqGS: GUID), Radware (NasdaqGS: RDWR) and Vasco Data Security (NasdaqGS: VDSI), reports the Wall Street Journal.

Citing Goldman, the Journal reports that the average hedge fund ownership of those cyber security names is nearly 23%. Goldman also points out something that has been frequently highlighted in this space: HACK’s penchant, and that of its underlying index, for positive responses to cyber security breaches, events that are considered bad news. [Headlines Help HACK]

According to Goldman, there have been 17 high-profile cyber security breaches since the second quarter of last year involving companies such as Apple (NasdaqGS: AAPL), Tesla (NasdaqGS: TSLA), Starbucks (NasdaqGS: SBUX) and, on multiple occasions, the federal government. HACK debuted in November, so it has been around for at least 10 of the cyber scrares mentioned by Goldman.

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.