Scalper1 News
The year 2015 may have been soft for the cybersecurity ETFs, but the craze for issuing more cybersecurity funds has not abated at all. Issuers are still seeing long-term prospects in it. Most recently, ETF issuer Global X announced plans to dip its toes into the space and filed for a cybersecurity ETF. Inside the Proposed Fund The fund looks to track the Cyber Security Index. The fund invests a minimum of 80% of its total assets in global securities, and in ADRs and GDRs based on the securities in the underlying index, per the filing . How Does It Fit in the Portfolio? The newly filed ETF can be a good choice for investors seeking exposure to the fast-growing and high-potential space of cybersecurity. While technology has been a great boon to mankind, it has lugged with it the ills of “cybercrime”. Enterprises and government agencies constantly face cyber attacks and are always in the want of rigorous cybersecurity to fight hackers. Per the Center for Strategic and International Studies and McAfee, cybercrime is a fast expanding industry with high returns and low risks. Their study projects that cybercrime costs the world over $400 billion per year. Also, “Key Findings from the Global State of Information Security Survey 2015” by PWC indicated that cybersecurity instances increased at a CAGR of 66% from 2009. These data clearly explain the latent potential of the newly filed product. ETF Competition While no one has any doubt over the success of the fund, provided it gets an approval, thanks to the budding potential in the space, competition seems to be a little tough. The PureFunds ISE Cyber Security ETF (NYSEARCA: HACK ) and the First Trust NASDAQ CEA Cybersecurity ETF (NASDAQ: CIBR ) are presently operating in the regular cybersecurity field with about $1.02 billion and $105.8 million, respectively. HACK is about a year old while CIBR is just six months old. HACK charges 75 bps, and CIBR charges 60 bps as fees. Investors should also note that Direxion – a renowned player in the leveraged and inverse leveraged ETF world – is also in the arena with two products focusing on the cybersecurity sector – one providing a leveraged bull play and the other an inverse leveraged bear play. The Direxion Daily Cyber Security Bull 2x Shares ETF (NYSEARCA: HAKK ) looks to offer double the daily exposure to the ISE Cyber Security Index while the Direxion Daily Cyber Security Bear 2x Shares ETF (NYSEARCA: HAKD ) gives twice the opposite exposure of the daily performance of the same index. If Global X fund manages to get an approval, it needs to offer competitive expense ratio and a better balancing in portfolio to garner investors’ assets. After all, the proposed fund lacks the first-mover advantage. So, to beat HACK and CIBR over the long term, the proposed fund should offer attractive options as far as exposure, stock-specific concentration risk and expense ratios are concerned. Original post Scalper1 News
Scalper1 News