Tag Archive for: ETF

The HACK Cybersecurity ETF in Focus

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The ETFMG Prime Cyber Security ETF (HACK) is likely to continue enjoying increased investor interest as long as cyber defense remains an integral part of a business’s security measures—and it appears as though it will. According to a report by Global Market Insights, the cybersecurity market has an expected compound annual growth rate of 15% through 2032 and is forecast to reach a market size of about $900 billion.

Learn more about the HACK ETF and see what’s in store for the cyber defense securities market.

Key Takeaways

  • The HACK ETF invests in companies that create cybersecurity solutions.
  • Spending on cybersecurity is expected to grow rapidly, with a CAGR forecasted to be as much as 15% through 2032.
  • Cyber attacks on the U.S. government and businesses continue to make headlines, fueling growth expectations as the world migrates more to a digital landscape.

HACK ETF Overview

The HACK ETF, sponsored by ETF Managers Group LLC, or ETFMG, invests in companies that offer hardware, software, and services in the cybersecurity field. It is designed to track the performance of the Prime Cyber Defense Index (PCYBER), which includes “companies providing cybersecurity solutions that include hardware, software, and services.”

The fund launched in Nov. 2014, and as of Jan. 23, 2024, it has assets under management (AUM) of $1.7 billion.

Top Holdings

The fund has a total of 48 holdings. The top 10 holdings as of Jan. 23, 2024, are:

  • CrowdStrike Holdings Inc. (CRWD)
  • Zscaler Inc. (ZS)
  • Fortinet Inc. (FTNT)
  • Palo Alto Networks Inc. (PANW)
  • BAE Systems Plc. (BAESY)
  • Cloudflare Inc. (NET)
  • Check Point Software Tech Ltd. (CHKP)
  • Gen Digital Inc. (GEN)
  • Cisco Systems Inc. (CSCO)
  • Okta Inc. (OKTA)

Performance

As of Dec. 31, 2023, the fund had a one-year performance of 37.42%, a three-year performance of 1.91%, and a five-year performance of 12.92%. Since its inception, the fund has a performance of 10.64%.

As of Jan. 22, 2024, HACK closed at $63.39. The stock dropped significantly at the end of 2021 during the COVID-19 pandemic and continued to fall throughout 2022. The share price started to gain traction again in 2023 and took off in Oct. 2023.

Cyber Security…

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This Defense ETF Combines Defense, Cybersecurity, and AI

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You might not expect to find stocks like Broadcom (NASDAQ:AVGO) or Crowdstrike (NASDAQ:CRWD) in a defense ETF, but the SPDR S&P Kensho Future Security ETF (NYSEARCA:FITE) is a unique defense ETF that takes a differentiated, forward-looking approach to national security and the defense industry.

The concept of warfare is rapidly evolving and now increasingly encompasses cyber warfare, drones, space, and other new arenas. That’s why the FITE ETF goes beyond tanks, fighter planes, and missiles and expands the definition of defense to include companies involved in software, cybersecurity, drones, robotics, and more.

I’m bullish on FITE because this differentiated ETF enables investors to capitalize on this nascent theme.

What is the FITE ETF’s Strategy?

FITE invests in an index called the S&P Kensho Future Security Index. According to fund sponsor State Street (NYSE:STT), the index is comprised of “companies whose products and services are driving innovation behind future security, which includes the areas of cybersecurity, advanced border security, and the following areas for military application: robotics, drones and drone technologies, space technology, wearable technologies and virtual or augmented reality activities.”

Thus, the ETF allows investors to “invest in a portfolio of companies involved in the future of warfare and a nation’s security.”

A Portfolio Built for the Future of War

FITE holds 60 stocks, and its top 10 holdings account for just 20.8% of the fund, so FITE is fairly diversified and does a good job of limiting concentration risk.

Below is an overview of FITE’s top 10 holdings using TipRanks’ holdings tool.

While war is still fought on the battlefield, it is increasingly moving into new fronts, and FITE’s portfolio capitalizes on this shift.

One key arena is cyberspace. The Heritage Foundation states, “No threat facing America has grown as fast, or in a manner as difficult to understand, as the danger from cyberattacks.” It reports that the most dangerous cyberattacks come not from lone hackers in a basement but sophisticated nation-state hackers who view cyber warfare as a new avenue to attack the United States. Terrorist organizations and…

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HACK Stock Price | ETFMG Prime Cyber Security ETF

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Charles Schwab to Launch Crypto-Themed ETF on New York Stock Exchange

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After being dubious of crypto for some years, Charles Schwab will launch its Schwab Crypto Thematic Index next week.

The fund, which will trade on the New York Stock Exchange Arca under the STCE ticker, will offer indirect exposure to the “crypto ecosystem,” Schwab Asset Management, the investment arm of the Charles Schwab Corporation, said in a statement.  

Schwab’s prospectus, which the firm filed with the U.S. Securities and Exchange Commission on Friday, says in bold type that the new fund “will not invest in cryptocurrency or digital assets directly.” 

Rather, at least 80% of the fund’s assets will be invested in securities, like shares of companies that have a stake in crypto. For example, the prospectus said the fund currently has 44% of its assets invested in software companies and another 41% in the diversified financials sector.

“STCE can offer more targeted exposure to cryptocurrency-focused companies compared to blockchain technology ETFs, which may have significant exposure to multi-national companies involved in blockchain (e.g., Amazon, IBM, Mastercard, and others),” David Botnet, Schwab’s head of equity product management, told Decrypt in an email.

The fund will have an annual fund operating expense of 0.30%, which works out to be $3 per $1,000 invested. That means it’ll have “the lowest cost crypto-related ETF available to investors today,” the company said in the announcement.

For comparison’s sake, the Bitwise Crypto Industry Innovators ETF (BITQ) charges 0.85% and VanEck, which just filed a new spot Bitcoin ETF application, charges 0.50% on its Digital Transformation ETF (DAPP).

It’s a bid to eke out an advantage while being late to the field. Schwab has trailed behind its traditional finance competitor, Fidelity, for a few years now.

In 2019, Charles Schwab CEO Walt Bettinger was dismissive of crypto, calling it too “speculative.” Meanwhile, in 2019, Fidelity had just been granted a charter to operate its Fidelity Digital Asset Services as a limited liability trust company in New York State.

Then, at the start of 2022, Schwab’s Bettinger told The Dallas Morning News that he thinks there’s “a tremendous void” in…

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