Data Defenders: A Cybersecurity ETF

Hardly a day goes by without the news reporting a break-in by cybercriminals, compromising the networks of prominent companies and consumers, and making off with vital customer data.

In recent months, cybercriminals used a security hole to access network servers of credit scoring agency Equifax, and stole vital personal information of half of U.S. consumers. And in recent years, cyberthieves broke into Yahoo networks, where they stole the names and email addresses for 1.5 billion customers globally. Similarly, cybercriminals made off with the names and logins of 80 million JPMorgan Chase customers in 2014.

These are just a few of the neverending breaches affecting some of the biggest consumer companies and their users today.

In fact, financial damage from cybercrime is about $600 billion worldwide, up from $500 billion in 2014, according to a 2018 report from security company McAfee in a recent report.

Who’s leading the charge in preventing cybercrime?

Fortunately, some of the most innovative technology companies in the U.S. are hard at work coming up with solutions. These include Palo Alto Networks, whose advanced firewalls purport to build a perimeter around an enterprise’s entire workforce wherever they may be, or Cisco’s endpoint and intrusion detection systems, or Symantec’s state of the art protection for consumer systems.

Data Defenders lets you invest in many of these companies.

What’s in the fund?

Data Defenders (Ticker: CIBR) follows the Nasdaq CTA Cyberscurity Index. This index tracks many of the leading cybersecurity companies involved in building, implementing, and managing security systems to protect data and operations on private and public networks, as well as on personal computers and mobile devices.

Data Defenders includes 33 stocks* of companies, including some well-known technology titans such as router company Cisco Systems, enterprise security company Palo Alto Networks, network security company Symantec, and domain key registrar and network infrastructure company VeriSign.

Companies in the fund must have a market cap of at least $250 million, according to the prospectus.

Industry exposure of the fund

Source: First Trust, as of February 16, 2018

Geographic breakdown of the fund

Source: U.S. News & World Report, as of January 31, 2018

What other funds are like this?

ETFMG Prime Cyber Security ETF, (Ticker: HACK), follows a similar index called the Prime Cyberdefense Index, which contains many of the companies CIBR does.

Year to date, CIBR has returns of 4.6%.  For the year, CIBR has returns of 16.4%, and HACK had returns of 4.67% and 16.8% respectively as of February 16, 2018.

Other funds with similar focuses include Fidelity® MSCI Information Tech ETF, or (FTEC), which has a year-to-date return of 7.6%, and a one-year return of 41%.

What’s the expense ratio?

Data Defenders has an expense ratio of 0.6% annually, which is a bit higher than the industry average for an ETF of about 0.23%, according to the Investment Company Institute. HACK has a similar expense ratio, of 0.64%.

By Stash Team

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