Exchange traded funds tracking the technology sector, the largest sector weight in the S&P 500, have been solid though not spectacular performers this year. For example, the Technology Select Sector SPDR (NYSEArca: XLK), the largest tech ETF by assets, and the Vanguard Information Technology ETF (NYSEArca: VGT) are up an average of 4.6% year-to-date.
Those performances are nice, but they are also well off the 19% returned by the PureFunds ISE Cyber Security ETF (NYSEArca: HACK). Although HACK, the first dedicated cyber security ETF has retreated in recent weeks, that 19% gain is enough to make the fund one of this year’s top-performing sector ETFs that is not a healthcare or biotech fund. Each of the top 10 non-leveraged sector ETFs on a year-to-date basis are biotech or healthcare funds. [Headlines Help HACK]
Investors are responding the phenomenon that is HACK by continuing to pump cash into the ETF.
“While investors yanked $730 billion out of the tech sector – with more than ten ETFs seeing outflows – the PureFunds ISE Cyber Security ETF (HACK) has taken in $115 million. HACK is now at $1.3 billion in assets, a number that is much larger than anyone would have predicted when it was launched less than a year ago. Much of the cash coming in is due a renewed focus on cyber-security in all businesses,” reports Eric Balchunas for Bloomberg.
On June 18, PureFunds officially said HACK had $1 billion in assets under management. In about a month of trading since then, HACK has swelled to over $1.3 billion in assets. To be precise, HACK had $1.33 billion in assets as of July 16. [HACK Hits $1B in Assets]
During the second quarter, investors pumped $650.2 million into HACK, more than $540.6 million in combined inflows to XLK and VGT. Since the start of this month, investors have added $129.6 million to HACK while pulling a combined $558 million from XLK and VGT.
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.
The ETF’s success prompted the creation of a rival, which is also off to a solid start. The First Trust NASDAQ CEA Cybersecurity ETF (NasdaqGM: CIBR) debuted earlier this month and is already home to $21.5 million in assets.
Although the sample set is small, HACK has outperformed CIBR over the past week with the former rising by 0.15% and the latter falling by the same amount.
CIBR and HACK may not be alone in the cyber security ETF space for long as Direxion has plans to introduce leveraged bearish and bullish versions of HACK.
PureFunds ISE Cyber Security ETF