Daily ETF Watch: ‘HACK’ Fund Launches

November 12, 2014

[Editor's note: A previous version of this story erroneously said the Emerging Markets Internet & Ecommerce ETF launched on Wednesday, Nov. 12. The fund in fact launched on the following day, Thursday, Nov. 13. We regret the inacccuracy.]

A niche equity exchange-traded fund, the PureFunds ISE Cyber Security ETF with the catchy ticker “HACK,” launched today, the latest in a long line of finely tuned investmeent strategies that the ETF industry has become famous for.

The launch bring to 178 the number of ETFs that have launched this year, up from 162 in all of 2013. The increase clearly suggests that growth in the vibrant world of ETFs continues to accelerate almost 22 years after the first U.S.-listed ETF was brought to market.

In sum, more than 1,600 U.S.-listed ETFs have assets that are fast approaching $2 trillion, according to data compiled by ETF.com. For perspective, hedge funds command about $3 trillion in assets, and open-end mutual funds have about $15 trillion in assets under management, according to fund industry sources.

The ETF, which will come with an annual expense ratio of 75 basis point, or $75 for each $10,000 invested, will invest in hardware or software companies around the world that are focused on cybersecurity, according to the fund’s prospectus.

The filing said cybersecurity refers to products and services designed to protect computer hardware, software, networks and data from unauthorized access, vulnerabilities, attacks and other breaches.

“HACK” is the latest in a long line of niche strategies served up in an ETF wrapper, and for which First Trust, the Wheaton, Illinois-based money management firm, has become famous. Investor receptivity has varied—many such funds are now on the ash heap of ETF history, some are failing and others are succeeding.

On the one hand, funds like the $11 million First Trust Nasdaq CEA Smartphone ETF (FONE | D-7) are falling flat. But ETFs such as the $345 million First Trust ISE Cloud Computing (SKYY | B-32), or even the $102 million Robo-Stox Global Robotics and Automation ETF (ROBO | F-19), are resonating with some investors.

“HACK” is organized around the ISE Cyber Security Index, the same indexing firm that provided the index for the highly successful First Trust ETF, “SKYY.”

Increase In Launches

The launch bring to 178 the number of ETFs that have launched this year, up from 162 in all of 2013. The increase clearly suggests that growth in the vibrant world of ETFs continues to accelerate almost 22 years after the first U.S.-listed ETF was brought to market.

In sum, more than 1,600 U.S.-listed ETFs have assets that are fast approaching $2 trillion, according to data compiled by ETF.com. For perspective, hedge funds command about $3 trillion in assets, and open-end mutual funds have about $15 trillion in assets under management, according to fund industry sources.

 

 

 

 

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