Increased Cyber Attacks Could Be a Boon for CyberSec ETFs

“If you think that the number and frequency of cyber attacks will continue to trend upward, you may be bullish on cyber security infrastructure stocks,” Direxion analysts said in a note.

Investors may also track the burgeoning industry through related indices, like the ISE Cyber Security Index (HXRTR), which is comprised of domestic and foreign companies that are cyber security infrastructure providers, provide cyber security services, or are companies for which cyber security is a key driver of their business.

The PureFunds ISE Cyber Security ETF (NYSEArca: HACK), the first exchange traded fund dedicated to the fast-growing cyber security space, reflects the performance of the ISE Cyber Security Index The First Trust NASDAQ CEA Cybersecurity ETF (NasdaqGM: CIBR) also tracks companies engaged in the cybersecurity segment of the tech and industrials sectors.

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.

Alternatively, traders can also capitalize on sudden market turns through recently launched leveraged and inverse options, including the Direxion Daily Cyber Security Bull 2X Shares (NYSEArca: HAKK) and the Direxion Daily Cyber Security Bear 2X Shares (NYSEArca: HAKD), which take the 200% and -200% daily exposure of the ISE Cyber Security Index, respectively.