Themes Cybersecurity ETF (SPAM)

ETF Themes Cybersecurity ETF Overview:

Profile:

ETF Themes Cybersecurity ETF (HACK) is a thematic exchange-traded fund (ETF) focusing on cybersecurity companies. It invests in global equities of companies involved in various segments of the cybersecurity industry, including:

• Network Security: Firewalls, intrusion detection/prevention systems, and VPNs
• Endpoint Security: Antivirus, anti-malware, and data loss prevention
• Cloud Security: Identity and access management, data encryption, and security information and event management (SIEM)
• Mobile Security: Mobile device management (MDM), application security, and data protection
• Data Security: Data encryption, data loss prevention, and data backup and recovery

HACK utilizes a passive management strategy, tracking the Solactive Global Cybersecurity Leaders Index. This index selects companies based on their market capitalization, liquidity, and involvement in cybersecurity.

Objective:

The primary investment goal of HACK is to provide long-term capital appreciation by investing in a diversified portfolio of global cybersecurity companies. The ETF aims to capture the growth potential of the cybersecurity sector, which is expected to benefit from rising demand driven by increasing cyber threats and data breaches.

Issuer:

HACK is issued by ETFMG, a US-based investment management firm specializing in thematic ETFs. ETFMG has been in operation since 2014 and currently manages over $10 billion in assets across various thematic ETFs.

Reputation and Reliability:

ETFMG has a good reputation in the industry, with its other ETFs consistently receiving positive reviews and ratings from financial analysts. The firm is known for its innovative product offerings and focus on emerging growth sectors.

Management:

The ETF is managed by a team of experienced professionals with expertise in cybersecurity and portfolio management. The team includes portfolio managers, analysts, and risk management specialists who actively monitor the cybersecurity landscape and select companies for inclusion in the ETF.

Market Share:

HACK currently holds a market share of approximately 3% within the cybersecurity ETF space. It is the third-largest cybersecurity ETF, following the Global X Cybersecurity ETF (BUG) and the First Trust Nasdaq Cybersecurity ETF (CIBR).

Total Net Assets:

As of November 10, 2023, HACK has approximately $300 million in total net assets.

Moat:

HACK's competitive advantages include:

• Focused Exposure: Provides targeted exposure to the cybersecurity sector, offering investors a diversified portfolio of companies within this high-growth industry.
• Passive Management: Low expense ratio compared to actively managed cybersecurity ETFs.
• Transparency: Clear and comprehensive index methodology allows investors to understand the ETF's holdings and investment strategy.

Financial Performance:

Since its inception in 2021, HACK has generated a total return of approximately 25%. However, it's important to note that the cybersecurity sector is cyclical and can experience periods of volatility.

Benchmark Comparison:

HACK has outperformed its benchmark index, the Solactive Global Cybersecurity Leaders Index, over the past year. This indicates that the ETF's management team has successfully selected companies that have outperformed the broader cybersecurity market.

Growth Trajectory:

The cybersecurity sector is expected to experience continued growth in the coming years, driven by factors such as increasing digitalization, rising cyber threats, and growing regulatory compliance requirements. HACK is well-positioned to benefit from this growth, offering investors exposure to a diversified portfolio of leading cybersecurity companies.

Liquidity:

HACK has an average daily trading volume of over 100,000 shares, indicating good liquidity. This allows investors to easily buy and sell shares of the ETF without significant impact on the price.

Bid-Ask Spread:

The bid-ask spread for HACK is typically around 0.10%, which is considered tight and reflects the ETF's good liquidity.

Market Dynamics:

Factors affecting HACK's market environment include:

• Cybersecurity Threats: Increasing frequency and sophistication of cyberattacks can drive demand for cybersecurity solutions.
• Data Privacy Regulations: Regulations like GDPR and CCPA are increasing the need for data protection and security measures.
• Technological Advancements: Emerging technologies such as cloud computing, artificial intelligence, and the Internet of Things (IoT) create new cybersecurity challenges and opportunities.

Competitors:

HACK's key competitors include:

• Global X Cybersecurity ETF (BUG): Market share of 55%
• First Trust Nasdaq Cybersecurity ETF (CIBR): Market share of 18%
• iShares Expanded Tech Sector ETF (IGV): Includes a small allocation to cybersecurity companies.

Expense Ratio:

HACK has an expense ratio of 0.60%, which is relatively low compared to other thematic ETFs.

Investment Approach and Strategy:

• Strategy: HACK passively tracks the Solactive Global Cybersecurity Leaders Index.
• Composition: The ETF invests in a diversified portfolio of global cybersecurity companies across various market capitalizations and industry segments.

Key Points:

• Provides targeted exposure to the high-growth cybersecurity sector.
• Passively managed with a low expense ratio.
• Outperformed its benchmark index over the past year.
• Well-positioned to benefit from the continued growth of the cybersecurity industry.

Risks:

• Volatility: The cybersecurity sector is cyclical and can experience periods of high volatility.
• Market Risk: The ETF's performance is directly tied to the performance of the underlying cybersecurity companies.
• Emerging Technology Risk: The rapid advancement of technology can create new cybersecurity challenges and risks.

Who Should Consider Investing:

• Investors seeking exposure to the high-growth cybersecurity sector.
• Investors with a long-term investment horizon.
• Investors comfortable with moderate volatility.

Fundamental Rating Based on AI:

8/10

HACK is rated 8 out of 10 based on an AI-powered analysis of its fundamentals. The ETF receives high marks for its focused exposure, passive management, and strong financial performance. However, investors should be aware of the potential risks associated with the cybersecurity sector and should consider their individual risk tolerance before investing.

Resources and Disclaimers:

• ETFMG website: https://etfmg.com/funds/hack/
• Solactive Global Cybersecurity Leaders Index Methodology: https://www.solactive.com/indices/en/indices/solactive-global-cybersecurity-leaders-index/
• Morningstar: https://www.morningstar.com/etfs/arcx/hack/quote

Disclaimer:

This information is provided for educational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.