Quick Start Brings Competition
However, unlike ROBO and LIT, HACK came out of the launch gate on fire, attracting hundreds of millions of dollars in assets right off the bat. The fund debuted in November 2014 right before the Sony hack made headlines, which was followed by a series of other high-profile corporate hacking incidents. A little more than six months later, HACK cracked the $1 billion asset mark.
Success attracts competition, and by the summer of 2015, the First Trust Nasdaq Cybersecurity ETF (CIBR) was launched, which has $212 million in assets. HACK and CIBR have performed similarly this year, with HACK up 11.65% to CIBR’s 11.22%. For the past 12 months, CIBR has a performance edge of 25% to HACK’s 21%.
Charts courtesy of StockCharts.com
Assets Do Not Come Easy
There are a few other thematic tech ETFs that are making it up the asset hill to various degrees of success. The PureFunds ISE Mobile Payments ETF (IPAY) has offered investors a digital pay play, and after nearly two years, it has attracted $88 million in assets, while gaining an 8.5% return year-to-date and 16.30% in the last 12 months. There is no other competing pure-play digital pay fund.
Further down the asset chain, two other thematic tech ETFs are marking their one-year anniversaries by topping $10 million in assets: the PureFunds Drone Economy Strategy ETF (IFLY), with $11 million in assets; and the Amplify Online Retail (IBUY), with $10 million in AUM. These two may go hand in hand one day as a play. Amazon and other online retailers are very serious about using drones for delivery.
Both funds have seen about half the returns year-to-date and over the last 12 months as the other funds mentioned. Their time may certainly come, but as we have seen from LIT, patience is a virtue for ETF issuers, and it can be a flaw if assets never come around. There are other thematic tech ETFs that haven’t moved beyond their seeding funding of $2.5 million in assets.
With every new thin slice of the market that ETFs serve up, there is usually eye-rolling and the feeling that there are too many ETFs. But as seen above, these niche plays do sometimes attract meaningful assets and solid returns.
But make no mistake, the slog is real.
At the time of writing the author did not own any of the ETFs mentioned. Drew Voros can be reached at [email protected].