Daily ETF Watch: HACK Companions Launching

The firm known for bringing the first cybersecurity ETF to market and seeing it rapidly become a $1 billion fund is rolling out two more technology-related ETFs today. The PureFunds ISE Big Data ETF (BDAT) and the PureFunds ISE Mobile Payments ETF (IPAY) are both set to launch on the NYSE Arca.

According to the prospectus, BDAT will target companies that provide solutions for the management and analysis of large data sets as well as companies that actually create and gather large data sets. The index uses what the prospectus terms a “modified linear-based capitalization-weighted methodology.” The weight of a company is dependent on the number of components in the index in addition to its market capitalization; the purpose is to keep individual stocks from dominating the index’s performance.

Associated Risks

Among the risks associated with big data companies, the prospectus notes, are intense competition, “limited product lines, markets, financial resources or personnel,” regulatory constraints and the threat of obsolescence, among others.

The index included 32 components on June 19, the largest of which were Google at 6.06 percent of the index, Facebook at 5.87 percent and Oracle Corp. at 5.71 percent.

Meanwhile, IPAY will cover all aspects of the payment industry, including credit card networks, infrastructure and software providers, and payment processing and payment solutions providers. Its index uses a similar weighting methodology to BDAT’s. The benchmark had 30 components as of June 19, the largest of which were Visa at 6.45 percent of the index, MasterCard at 6.24 percent and American Express at 6.02 percent.

The PureFunds ISE Cyber Security ETF (HACK | C-24) launched in November 2014 and has already grown into a $1.26 billion fund, helped along by several highly publicized security breaches of major networks. It’s clear with this latest launch that PureFunds is looking to re-create that success by targeting other areas in the tech space that are likely to see rapid growth.

Both funds come with an expense ratio of 0.75 percent, which is also what HACK costs.