Scalper1 News
Rampant cybersecurity breaches have become quite prominent these days and have prompted companies to commit billions of dollars annually in hopes of preventing future attacks. This is in turn acting as a major tailwind for the U.S. cybersecurity industry. The success of the cybersecurity industry is prompting issuers to come out with funds devoted to this niche space. Most recently First Trust has launched the First Trust NASDAQ CEA Cybersecurity ETF , which trades under the ticker CIBR . CIBR in Details The newly-launched ETF tracks the Nasdaq CEA Cybersecurity Index to provide exposure to the performance of companies engaged in the cybersecurity segment of the technology and industrials sectors. The fund includes companies primarily involved in the building, implementation, and management of security protocols applied to private and public networks, computers, and mobile devices in order to provide protection of the integrity of data and network operations. This approach results in the fund holding a small basket of 34 stocks. Qihoo 360 Technology Co. Ltd (NYSE: QIHU ) takes the top spot with 7.05% exposure, followed by Palo Alto Networks, Inc. and FireEye, Inc., each with over 6% exposure. Software dominates the fund with a little less than 50% exposure, followed by Communications Equipment and Internet Software & Services, each with double-digit allocation. The fund charges 60 basis points as fees. How Does it Fit in a Portfolio? The fund provides a good opportunity for investors to play the niche area of cyber security. Cybersecurity breaches have been witnessed in almost every industry, with some of the big shot companies such as JPMorgan Chase (NYSE: JPM ), eBay (NASDAQ: EBAY ) and Apple (NASDAQ: AAPL ) been among the victims this year. According to a report by McAfee, cyber crime cost the world economy $400 billion in 2014. Per KPMG, a professional services firm, cyber crime is expected to cost the world an enormous $560 billion per year . Thus with the huge demand for companies in the cybersecurity industry, investors would be better off in investing in this fund. ETF Competition Cybersecurity is a quite a new area and there is currently just one fund focused on this space. ISE Cyber Security ETF (NYSEARCA: HACK ) with an asset base of $1.3 billion is the first product in the space and trades with good volumes of 1 million shares. The fund tracks the ISE Cyber Security Index. The index tracks the performance of companies actively engaged in providing services for the cybersecurity industry. These cybersecurity services are designed to protect computer hardware, software, networks and data from unauthorized access, vulnerabilities, attacks and other security breaches. The equal weighted fund presently holds a basket of 31 stocks, with Intralinks Holding, Vasco Data and Proofpoint Inc being the top three holdings, each comprising a little more than 4% of total fund assets. As far as the sub-industry breakdown is concerned, the fund has roughly the same exposure as CIBR. However, HACK is a little costly than CIBR and charges 75 basis points as fees. CIBR thus has a good chance of gaining popularity if we consider its expense ratio. Even if we don’t take into account the expense ratio, the huge demand for cybersecurity stocks should help the newly launched ETF gather reasonable assets. Original Post Scalper1 News
Scalper1 News