HACK into Cyber Security

06/24/2015 9:00 am EST


Nicholas Vardy

Editor, Oxford Wealth Accelerator

Investing in 31 companies, this new recommendation offers investors’ broad exposure to companies at the forefront of cyber and data security, explains Nicholas Vardy, editor of The Alpha Investor Letter.

Cyber security has been a red-hot sector; indeed, investing in cyber security is one of my top investment themes for the coming year.

Internet of Everything technology offers tremendous benefits. At the same time, it has introduced the world to cyber crime. Cyber attacks on governments and corporations have become routine events.

Non-existent before the popularization of the Internet, one study estimated that cyber crime costs the globe over $400 billion per year.

In addition to financial losses, cyber attacks can potentially disrupt financial markets, a country’s energy infrastructure, weapons defense systems, medical devices, and transportation systems. Both Russia and China regularly launch attacks against the US.

Defense against cyber attacks has become a very big business. Of course, picking the long-term winners within the dynamic cyber security sector is a challenge.

If you are holding one of the winners in the shakeout, you will make a fortune. But if you bet on one of the losers, you can lose a lot of money.

That’s why I believe a diversified bet on cyber security through PureFunds ISE Cyber Security ETF (HACK) is the single best way for longer-term investors to profit from this compelling investment.

HACK invests in 31 stocks across the planet, all focused on software systems and other solutions that defend against cyber attacks.

Its top three holdings include Fireeye (FEYE), 5.87%; Cyberark Software Ltd. (CYBR), 5.84%; and Infoblox (BLOX), 5.34%. The fund invests 49.35% of its portfolio in the top 10 holdings.

Roughly 70% of holdings hail from the United States, followed by 13% from Israel, 5% from the Netherlands, and 4.7% from South Korea.

As the first cyber security-focused exchange-traded fund, HACK has seen huge growth. Launched in November of 2014, HACK has gathered over $900 million in assets and has returned over 26%. The fund charges 0.75% in fees. It trades at solid volumes of 560,000 shares a day.

HACK has outperformed both the S&P 500 and the NASDAQ by more than 21% and 16% over the past six months, respectively.  It has gained 19.5% in 2015. Buy the PureFunds ISE Cyber Security ETF at market today.

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