Bolstering The Case For The Cybersecurity ETF And Its Leveraged Counterpart
On its way to gaining a cult following and then some, one thing was a given for the PureFunds ISE Cyber Security ETF (NYSE: HACK): The world's first cybersecurity exchange traded fund usually responded positively to what was negative news about hacks, cyberbreaches and related fare.
If that theme is renewed, with the help of a favorable run by the broader technology sector of course, HACK would benefit as would the newly minted Direxion Daily Cyber Security Bull 2X Shares (NYSE: HAKK). HAKK and its bearish counterpart, the Direxion Daily Cyber Security Bear 2X Shares (NYSE: HAKD), both of which debuted last week, are the first leveraged cybersecurity ETFs to debut.
HAKK, the double-leveraged bullish cybersecurity, attempts to deliver double the daily returns of the SE Cyber Security Index (HXR), HACK's underlying benchmark. This year is not even over and already there have been major cyber breaches afflicting airlines, government agencies, financial services firms and health insurance providers, among others.
“The World Economic Forum (WEF), cited cyber-attacks as one of the fastest growing and highest impact risks for the world economy. This reflects both the growing sophistication of cyber-attacks and the rise of hyper connectivity, with a growing number of physical objects connected to the Internet and more and more sensitive personal data – including about health and finances – being stored on cloud servers. In the United States alone, cybercrime already costs an estimated $100 billion each year. Gartner Inc., a technology research firm predicts information-security spending will rise 7.1% in 2015, to $77.2 billion, and will reach $106.1 billion by 2019,” according to a Direxion note.
The next big and, unfortunately, bad thing that could prove to be good for HACK and HAKK is social hacking, or where nefarious computer villains attack a network via a site such as YouTube or Twitter.
“Currently, there are over 1.5 billion social network users worldwide with more than 60% of users accessing social media services via smart phones. Social networking is one of the most popular ways for online users to spend their time, and a preferred way to stay in contact with friends and families. This is one of the top reasons why hackers target social media networks. Users are likely to click links they think are posted by friends, which hackers use to their advantage,” notes Direxion.
Cybersecurity stocks have enjoyed impressive runs this year and, more recently, experienced some profit-taking. However, analysts are generally bullish on the industry, the aforementioned data points support that thesis and that could prompt a rebound in HACK and a nifty start for HAKK.
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