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Exchange-traded fund seeks to tap into cyber security market

Reuters

By Ashley Lau

NEW YORK (Reuters) - A new exchange-traded fund that invests in the cyber security industry could offer investors a silver lining to all of the data breaches that have hit U.S. companies over the past year.

The PureFunds ISE Cyber Security ETF (HACK.P), which is set to launch Wednesday on the NYSE Arca exchange, will invest in companies that develop products or provide services tied to malware protection - the idea being that as concerns over cyber attacks grow, the industry for protecting against unauthorized breaches will expand.

"It's an essential spend now in every IT budget, whether for the government, a corporation," or the everyday investor, said Christian Magoon, founder of Wheaton, Illinois-based YieldShares and a consultant to ISE ETF Ventures, which developed the index that the ETF tracks.

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The new ETF, whose ticker is aptly named "HACK," arrives after a number of companies have suffered data breaches, including retail outlets Home Depot Inc (HD.N) and Target Corp (TGT.N) and banking giant J.P. Morgan Chase & Co (JPM.N). The U.S. Postal Service has also been hit, it was announced this past Monday.[ID:nL3N0T06PM]

"HACK" will track the ISE Cyber Security Index, which is comprised of some 30 companies, including cloud security provider Qualys Inc (QLYS.O) and firewall manufacturer Fortinet Inc (FTNT.OQ), as well as Symantec Corp (SYMC.O) and Cisco Systems Inc (CSCO.OQ).

Qualys is up about 54.8 percent year-to-date and Fortinet is up about 42 percent, while Symantec is up about 6.8 percent and Cisco is up about 12 percent.

Palo Alto Networks Inc (PANW.N), among the holdings, just last week said it discovered a new family of malware affecting Apple Inc's (AAPL.O) OS X desktop and iOS mobile operating systems. [ID:nL4N0SV8WI]

Magoon said he expects the ETF will attract both investors who are interested in the long-term growth potential of the cyber security market, as well as those who will look to play event-driven news in the space.

(Reporting by Ashley Lau in New York; editing by Andrew Hay)