This week the world was hit by the biggest cyberattack it has ever seen with the virus still spreading unabated and threatening to create even more havoc. The virus is called WannaCry and it’s a real pain in the neck. It’s called ransomware. Once downloaded via email, the virus attacks all the files on your PC and encrypts them. That means all your documents, excel files and pictures become useless. When you attempt to open them, a message is displayed requesting a decrypt key in exchange for a monetary sum payable via Bitcoin. The vulnerability it exploited was a weakness in Windows’ file-sharing protocol. WannaCry changes the computer’s wallpaper with messages asking the victim to download the ransomware from Dropbox before demanding hundreds in bitcoin to work. If it is even unlocked after the ransom is paid is another issue altogether. WannaCry doubles the ransom amount and threatens loss of data, at a predetermined time creating a sense of urgency and greatly improving the chances victims will pay the ransom. It’s almost like you’ve been robbed at gunpoint.
On May 12 the virus struck. It affected nearly 300,000 computers in at least 150 countries, victims had to decide whether to pay $300. You can only imagine how many did actually pay. The three bitcoin wallets the hackers had setup, would start to fill up as payments started roll in. The virus was sent to computers Hospitals, major companies and government offices into chaos. Chinese universities and global firms like Fedex also reported they had come under assault. They all were forced to shut down. Here’s the good news: This virus has been contained. Here’s the bad news: Another major global cyberattack is underway and it’s tipped to be bigger than the WannaCry ransomware attack. What was interesting is that tech the cybersecurity industry’s valuation rose billions over last weekend. There is now an urgent need for cybersecurity to beef up their defences. Companies across the globe will be updating their malware and virus scanners to protect from such an attack going forward. Investors are betting on an increase in cyberattacks driving business to those who know how to defend against it. Shares of Symantec added $750m to its market cap since Friday. On Monday morning a US cyber security ETF, which tracks 40 companies in the industry, rose 3.3% in trading, beating the S&P 500’s rise. Its five biggest companies are Cisco (+2.8%), Symantec (+4%), Check Point Software (+2.4%) and Palo Alto Networks (+3.7%). Can I gain exposure to the cybersecurity space? You sure can. Betashares launched a cybersecurity ETF in 2016 called HACK. About the ETF
- The Betashares HACK ETF provides simple and transparent exposure to the leading companies in the global cybersecurity sector. A core component of a global equities allocation providing transparency and diversification benefits.
Advantages Because there are no pure-play cybersecurity firms on the ASX, you will need to look offshore. The tech sector only accounts for less than 2% of ASX market capitalisation. That’s why HACK is uniquely placed to give investors diversified exposure to leading global cybersecurity firms. The Fund is also structured to reduce the tax andadministrative burdens that can be associated with certain international investments. HACK invests in around 30 of the world’s largest global cybersecurity firms outside of Australia, which at end-June 2016 had an average market capitalisation of $A15 billion. Here are some advantages:
- Access – simple and cost-effective way to access a diversified portfolio of the world’s leading cybersecurity companies
- Diversification – with a single trade, investors can get exposure to a diversified portfolio of cybersecurity companies from a range of global locations
- Cost effective – Fund aims to track the performance of an index (no ‘active manager’ fees)
- Invest in global giants and emerging leaders – strategy invests in both existing marquee names as well as emerging players in the cybersecurity industry
- No W-8 BEN forms and no US estate tax implications for investors – simplified tax administration, unlike cross-listed alternatives
- Liquidity – available to trade on ASX like any share
How to Invest It’s simple. You can buy or sell units just like you’d buy or sell any share on the ASX. The code is HACK.AXW. The fund requires no minimum investment. We think HACK is a great way to gain exposure to the strong overall outlook for the global cybersecurity sector without taking undue stock specific risk and incurring costs with trading overseas companies.