Daily ETF Watch: New Fund Called ‘HACK’

Is the ETF market ready for a niche fund with a great pitch?

Managing Editor
Reviewed by: Olly Ludwig
Edited by: Olly Ludwig

The FactorShares Trust is close to launching an index fund focused on anti-malware technologies, the PureFunds ISE Cyber Security ETF, and it will be listed on NYSE Arca with the undeniably catchy ticker “HACK.”

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 $343 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.”

The inclusion of ticker and expense ratio in the “HACK” prospectus suggests the fund is quite near its launch date.


Olly Ludwig is the former managing editor of etf.com. Previously, he was a financial advisor at Morgan Stanley Smith Barney and an editor at Bloomberg News. Before that, Ludwig was a journalist at the Reuters News Agency in New York.