A cyber attack on factories, hospitals, shops and schools around the world put renewed attention on software security and the sector-related exchange traded funds that track the rising industry.
On Monday, the PureFunds ISE Cyber Security ETF (NYSEArca: HACK) surged 3.1% and the First Trust NASDAQ CEA Cybersecurity ETF (NasdaqGM: CIBR) jumped 2.8% on expectations that these cyber security companies would benefit from a pickup in cyber security spending as global firms and governments beef up their software defenses.
The cyber attack spread across the globe on Friday and by Monday had locked up computers in over 150 countries, with the European Union police agency Europol counting 200,000 machines infected, reports Helen Reid for Reuters.
“These attacks help focus the minds of chief technology officers across corporations to make sure security protocols are up to date, and you often see bookings growth at cyber security companies as a result,” Neil Campling, head of technology research at Northern Trust, told Reuters.
The attack would “refocus IT attention on updating security infrastructure and procedures” and benefit providers in email, network, and endpoint security, analysts at Wedbush wrote in a research report.
For example, spending on cyber security protection is expected to increase 10% in Britain and Europe by 2020, according to Brian Lord, a managing director of cyber and technology at cyber security firm PGI.
“In many companies there’s been an increase in investment inIT but not in the security that sits around it, so this investment is likely to play a bit of catch-up,” Lord told Reuters.
The PureFunds ISE Cyber Security ETF was the first listed ETF to focus on the cyber security sector, tracking an index of companies actively involved int eh cyber security industry, including names like Fireeye 4.9%, Qualys 4.4% and Imperva 4.4%, among others.
The First Trust Nasdaq Cybersecurity ETF also tracks companies engaged in the cybersecurity segment of the tech and industrials sectors, including Check Point Software Technologies 6.6%, Symantec Corp. 6.6% and Cisco Systems 6.0%.
While both track the cybersec segment, HACK focuses more on smaller companies starting out in the software security segment, with a focus on small- and micro-cap stocks, which makes up half of its portfolio. On the other hand, CIBR leans towards mid- and large-caps at 36.9% and 19.4%, respectively.
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