November 17, 2015
One year after a set of high-profile cyber attacks and a hot market for trendy exchange traded funds propelled the PureFunds ISE Cyber Security ETF to one of the most successful ETF launches in history, it is facing a major test of its investment strategy.
In the first nine months after its November 2014 launch, HACK raised $1.4 billion in assets, making it the third fastest growing new ETF in 2014 and the fastest from a small company, according to Lipper.
But even though spending on cyber security has not abated, and even though some standout stocks in that sector have soared in 2015, HACK itself is down 1.0 percent this year through Monday.
That is raising questions about whether a passively managed index fund, narrowly focused on a diverse but small industry group, can reward investors. A similar fund, the First Trust NASDAQ CEA Cybersecurity ETF, has fallen 11 percent since its July launch.