The network security industry group has climbed to the top 20 of IBD's 197 industry groups, up nearly 20% this year. That helps explain why ETF MG Cyber Security (HACK) is now one of the leading ETFs.
XShares of the exchange traded fund are near new highs after finding support in a pullback to the 50-day moving average. That leaves the ETF in a buy range. The relative strength line is making new highs, which is another plus for the chart.
ETF MG Prime Cyber Security has some winners in its portfolio that have played a big role in the ETF's success.
Fortinet (FTNT) is up about 30% since it started making new highs in November. Palo Alto Networks (PANW) has risen about 20% from the 156.95 buy point of a January breakout. Proofpoint (PFPT) is up nearly 25% from a breakout past a 98.02 buy point.
Symantec (SYMC), Juniper Networks (JNPR) and Check Point Software (CHKP) have been among a few laggards in the fund.
Some of the fund's stocks are not specifically in security software but in related fields. For example, Commvault Systems (CVLT) is an expert in cloud computing and data handling.
Experian, Other Big Hackings
Well-publicized hackings of major retailers, credit rating agency Equifax and dozens of others are reminders that consumer data remain vulnerable. Hackers also have hit computers of military, utility and other critical operations. New types of threats are emerging, such as "ransomware" attacks that demand payment to stop a data breach.
Spending in cybersecurity is expected to climb 19% to $90 billion this year, according to a report from market research firm GBH Insights, quoted in Barrons.com. The firm says the top areas of security spending include cloud security, next generation firewall technology, email security and identity access management.
Gartner, another research firm, estimates worldwide cybersecurity spending will rise to $96 billion in 2018.
The portfolio is divided into companies that are in cyberdefense architecture or cyberdefense applications. Each stock is equal weighted within its own category. That means there's little difference among the 47 holdings in terms of portfolio weightings, especially after the index is rebalanced quarterly.
By sector, 56% of the fund is invested in system software companies, 17% in communications equipment. It has smaller holdings in application software, internet software, IT consulting and aerospace-defense. The ETF has $1.28 billion in assets, according to Morningstar.
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