Insight on the Recent Launch of PureFunds ISE Cyber Security&trade ETF (HACK)
New York, NY - Point Roberts, WA - November 20, 2014 (www.investorideas.com newswire) Investorideas.com (www.investorideas.com), a global news source covering leading sectors including cybersecurity and biometrics issues a recent Q&A interview discussing the recent launch of PureFunds ISE Cyber Security™ ETF (HACK). Christian Magoon, consultant to ISE ETF Ventures and Founder and CEO of YieldShares, shares insight into the creation of the ETF and its future.
Can you tell us how long this has been in planning before launch?
A: Christian Magoon
The investment thesis underlying the PureFunds ISE Cyber Security ETF (HACK) dates back several years. The fund's index provider, the International Securities Exchange (ISE), has a history of creating investment-based indexes within growth segments of broad sectors. Specifically, the ISE created the first cloud computing index several years ago which is tracked by an ETF with assets of more than $300 million. While creating the cloud computing index, ISE began initial research into an index focused on cyber security companies. At that time the universe of companies with a focus on cyber security was not ideal for an investable index to be created. Both the amount of companies with a focus on cyber security and the liquidity of those companies needed more seasoning. Over time the cyber security universe and its liquidity profile became more robust, which then led to the launch of HACK.
What companies are in the Index now and are there plans to add new companies?
A: Christian Magoon
There are 30 companies from a variety of countries, technology sub-industries and market capitalizations contained in the index today. To view all index constituents, visit the official ISE Cyber Security Index homepage. Index constituents are selected based on their active involvement in cyber security solutions that take the form of hardware, software and services. The number of companies that qualify to be included in the index is dynamic and based on industry growth, mergers and acquisitions.
What was the criteria for choosing companies?
A: Christian Magoon
ISE's index analyst team created and then evaluated a large group of technology companies that participate in the business of cyber security at some level. Since the goal of the index is to provide exposure to cyber security companies that are actively involved in cyber security infrastructure and services, many firms did not qualify. In addition, qualifying companies needed to have a minimum amount of market capitalization and liquidity to be a part of this investable index. In short, for a company to be part of the index it had to pass both qualitative and quantitative screens performed by the ISE’s index analyst team.
Where do you see the sector heading, as it seems that with each new technology brought to market to secure payments and the internet, hackers find a new way to intercept?
A: Christian Magoon
The largest driver of the cyber security industry is the increasing use of technology to store and access data by individuals, corporations and governments. As this usage increases, so do the temptations, methods and potential rewards for cyber crime. This drives the growth in attacks which then fuels the demand for cyber security. Studies as recent as September of 2014 report that the year over year compounded average growth rate of cyber attacks is 66% since 2009. This incredible growth rate can be attributed to factors including the increased use of mobile devices, apps and the continuous nature of software and operating system updates. In short, cyber security is an industry in growth mode that doesn’t appear to be ending soon. It’s also notable that cyber security spending is increasingly viewed as an essential spend. Indeed, not spending or even under-spending in this area creates massive risk for organizations. The cyber security industry’s essential nature - while remaining in growth mode - makes for an interesting investment opportunity.
Investorideas.com has created a global cybersecurity stock directory for investors to research the sector. http://www.investorideas.com/Companies/HomelandDefense/Stock_List.asp#CyberSecurity
Interviewer: D. Van Zant Investorideas.com editor
Bio: Christian Magoon
Christian Magoon is Consultant to ISE ETF Ventures and Founder and CEO of YieldShares. An ETF veteran, Christian has launched over 50 ETFs in the United States to date. He has helped drive the adoption of ETFs by U.S. investors through numerous educational efforts highlighting the efficiency, transparency and flexibility of the ETF vehicle.
Previously, Magoon served as President of Claymore Securities (now Guggenheim Investments). He led product development, marketing and distribution of ETFs, unit investment trusts and closed-end funds. Christian launched Claymore’s ETF business in 2006 and it became one of the fastest growing and most innovative ETF Sponsors in the industry.
In early 2010, Christian formed Magoon Capital LLC. The firm provides strategic insight on ETF product development and marketing to asset managers around the world. Christian continues to serve as CEO of Magoon Capital today.
Christian has been honored to receive recognition for his impact in the investment and ETF industry. Over the last five years he has been referred to as an “ETF Pioneer” by the Financial Times, was named “One of 5 People to Watch in ETFs,” by Institutional Investor, called an “ETF Jedi” by fund-industry publication, Ignites and was featured in the New York Times “Mutual Funds Report” discussing ETFs. Christian is also a Wall Street Journal Expert Panelist and noted investment author.
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