NEW YORK (MainStreet) — The rampant data breaches throughout the past year have spelled nothing but bad news for major corporations and millions of American consumers. Sony, Home Depot, Target, eBay and Apple are among the victims, with their customers and users suffering compromised sensitive personal and financial information. But as anxiety has swelled especially over the busy shopping period, there’s a silver lining for investors: the opportunity to capitalize on the prevalent hacks by investing in cybersecurity.
According to a PwC report from September, cyber hacks are increasing at 66% year-over-year, and cybersecurity investments are responding in kind: IDC is expecting the cybersecurity sector to have a 7% compound annual growth rate through 2017.
“It’s a growth industry, so to speak,” said Christian Magoon, consultant to the PureFunds ISE Cyber Security ETF (HACK), which launched on November 12 and is comprised of 30 holdings that are plays on cyber protection.
Magoon, who rang the New York Stock Exchange opening bell this morning on behalf of HACK, said the three main advantages of investing in cybersecurity are long-term growth potential, event-driven appreciation and diversification.
Traditional index investing has not allowed for an isolated play at cybersecurity, but the HACK ETF allows for exposure to three main categories across companies in the U.S., Israel, and South Korea: cybersecurity hardware, software, and consulting. Though the individual companies in the ETF may have different utilities or products -- 89% of companies are focused on hardware and software (infrastructure), with 11% focused on consulting (services) -- the ultimate goal they share is enhanced cybersecurity.