Cyber Security Fundamentals Point to Long and Short-Term Growth


Jun. 9 2015, Updated 12:19 p.m. ET

Need for cyber security

As we mentioned previously, the ISE Cyber Security ETF (HACK) has been giving investors substantial returns on investments. It lists the companies involved in the cyber security space. It’s a very volatile segment. However, since the number of cyberattacks on companies is rising, all of the firms that conduct their business digitally will increase their spending on digital security.

McAfee is a leading cyber security firm. It stated that “cyber-warfare and espionage attacks” will increase in the next few years due to substantial growth in the number of connected objects used. According to Gartner, a research firm, the spending on cyber security will increase from $71.1 billion in 2014 to $76.9 billion in 2015 globally.

As a result, the cyber security space is considered to be one of the fastest growing segments in the technology space.

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HACK consists of “high return” stocks

HACK mainly includes top rated stocks like Imperva (IMPV), Vasco Data Security International (VDSI), Palo Alto Networks (PANW), Infoblox (BLOX), and Proofpoint (PFPT). They generated trailing 12 month returns of 210.26%, 162.57%, 123.98%, 116.27%, and 86%, respectively.

These firms are expected to see “triple digits earnings growth” in the next quarters, according to analysts. HACK will benefit by holding the stocks in its portfolio. HACK’s assets under management are $655.8 million. They have grown over six times since its inception. Considering that its inception date was only a few months ago, money seems to be flowing into HACK at an astounding pace.

HACK gives investors a platform to play in this niche, high-growth segment. It also provides investors with a first-mover advantage. In comparison, XLK mainly provides exposure to large cap stocks. HACK provides exposure to equities in the small cap segment.

In the next part of this series, we’ll discuss the technical performance of the stocks listed in HACK.


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