Cyber security Investing in a safer digital future
About the index The ISE Cyber Security UCITS Index Net Total Return utilises a rules-based investment methodology to select a diverse group of companies actively involved in the cyber security industry. Companies are either classified as cyber security infrastructure providers or cyber security service providers. The index follows a modified equal weight portfolio weighting scheme and rebalances on a quarterly basis. For more information on the index, please visit www.ise.com. Index Performance Past 5 Years Indices Return in USD 1 year 3 years 5 years Volatility ISE Cyber Security UCITS* 34% 75% 125% 22% 0.77 STOXX Europe 600 Technology -8% 41% 65% 21% 0.46 MSCI AC World -6% 33% 62% 14% 0.68 TechDax 17% 91% 103% 21% 0.68 S&P Global 1200 Information Technology 0% 40% 96% 14% 0.96 Source: Bloomberg; all in USD; as of 31 August 2015 Sharpe Ratio All returns, correlations and volatilities are based on data in USD. Dates are from 31 August 2010 to 31 August 2015, unless otherwise stated. Sharpe ratios are based on 5 year annualised returns, 5 year annualised volatility and a risk free rate of 1%. *For the period prior to 01 September 2015, the data shown is derived from the published index values which are based on simulated back-tested data. Simulated past performance data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Historical performance is not an indication of or a guide to future performance. 5 year cumulative return 300 250 200 150 100 50 0 August 2010 2011 2012 2013 2014 August 2015 ISE Cyber Security UCITS* MSCI AC World S&P Global 1200 Information Technology TechDax STOXX Europe 600 technology Source: Bloomberg; all in USD; as of 31 August 2015 All returns, correlations and volatilities are based on data in USD. Dates are from 31 August 2010 to 31 August 2015, unless otherwise stated. Sharpe ratios are based on 5 year annualised returns, 5 year annualised volatility and a risk free rate of 1%. *For the period prior to 01 September 2015, the data shown is derived from the published index values which are based on simulated back-tested data. Simulated past performance data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Historical performance is not an indication of or a guide to future performance.
Cyber security Cyber security has become a crucial issue in the 21st century. Cyber attacks threaten governments, companies and individuals with financial, reputational and social damages every minute of every day. Cyber threat vulnerability is only increasing as more data, systems and people connect digitally. A unique group of cyber security companies defend the world against cyber attacks. Their products and services are in high demand as cyber security spending by governments and corporations increases. For investors, these cyber security companies may offer a growth oriented investment opportunity. ETF Securities, together with International Securities Exchange, LLC, an accomplished provider of investment based indices, are pleased to provide investors with an intelligently designed, efficient and convenient way to invest in leading cyber security companies around the world. Key features Convenient access to globally diversified basket of cyber security focused companies. Professionally selected portfolio via a rules based index methodology. Diversified across sub-industry, country and market capitalization. Focussed on cyber security sector and differentiated from broad-based technology indices. Rebalance of the fund each quarter provides responsiveness to new cyber security companies and maintains fund diversification. Potential for reduced volatility versus investing in individual cyber security stocks. Low cost and liquid investment vehicle.
Investment opportunities Event driven capital appreciation High profile cyber attacks have the potential to cause increased short term trading volume and share price appreciation of companies focused on cyber security. ETFS ISE Cyber Security GO UCITS ETF may be an effective trading vehicle for investors seeking to efficiently access cyber security stocks when high profile attacks take place. Long term capital appreciation The cyber security industry is expected to experience long term growth due to the increased demand for cyber security hardware, software and services. Driving that demand is the strong growth of reported cyber attacks. Since 2009, cyber attacks have increased at an annual compounded growth rate of over 66%.* ETFS ISE Cyber Security GO UCITS ETF may act as an effective allocation to the growth portion of an investment portfolio. Diversification of existing technology investments The majority of cyber security companies held by ETFS ISE Cyber Security GO UCITS ETF are not held by broad based technology funds. ETFS ISE Cyber Security GO UCITS ETF may help investors in broad based technology funds increase overall portfolio diversification. In addition, investors in individual cyber security stocks may increase their portfolio diversification and decrease their company specific business risks by using to compliment their holdings. Mergers and acquisitions potential Diversified technology and defence companies have begun to take an increased interest in offering cyber security products and services. Often, it can be difficult to organically develop new offerings and thus some firms prefer to acquire existing companies and technologies. This growing interest may benefit leading cyber security companies and solutions. *Source: PwC September 2014 From $106 to $170 Billion Cyber security industry growth over next 5 years Source: marketsandmarkets.com, Cyber Security Market By Solution - Global Forecast to 2020 Long term growth potential Since 2009, reported cyber security incidents have grown at a compound annual growth rate of 66%. Cyber security companies may benefit from increased incidents as this may generate further demand for hardware, software and services. Detected cyber security incidents (In Millions) 3.4 2009 Source: PwC September 2014 9.4 2010 22.7 2011 24.9 2012 28.9 2013 Estimated cost of cyber crime to $400 the global economy each year. Billion Source: PwC September 2014 Portfolio breakdown 7.8% 8.1% 34% 6.8% 16.7% 4.6% 4.6%3.6% 10.1% 11.2% 11% 4% 3.7% 1.2% 51% 56.9% 64.6% Small Cap (<$2 Billion) Mid Cap ($2 Billion - $10 Billion) Large Cap (>$10 Billion) Mega Cap (>$100 Billion) Systems software Communications equipment Internet software and services IT consulting and other services Application software Aerospace and defense 42.8 2014 United States Israel Japan Netherlands United Kingdom South Korea Canada Source: Bloomberg; Data as of 1 September 2015 Increased attacks Product Information Fund Name Benchmark ISE Cyber Security UCITS Net Total Return Index (HURNTR Index) London Stock Exchange - USPY (USD), ISPY (GBP) Listings & Tickers Deutsche Börse - USPY (EUR) ISIN IE00BYPLS672 UCITS Compliant Yes Domicile Ireland TER (%) 0.75 Base Currency USD Replication Physical Full Replication Distribution Accumulating Issuer GO UCITS ETF Solutions Plc Investment Manager GO ETF Solutions LLP Custodian Bank of New York Mellon Trust Company (Ireland) Limited Stock Lending No UK Reporting Fund Status Yes Top 10 holdings Company Ticker Weight FFRI Inc 3692 5.7% Sophos Group PLC SOPH 4.6% Trend Micro Inc 4704 4.4% Fortinet Inc FTNT 4.1% Check Point Software Technologies Ltd CHKP 4.0% Juniper Networks Inc JNPR 4.0% Cisco Systems Inc CSCO 3.8% Palo Alto Networks Inc PANW 3.7% KEYW Holding Corp KEYW 3.7% Radware Ltd RDWR 3.6% Subtotal 41.7% Source: Bloomberg; Data as of 1 September 2015
Important Information: This financial promotion has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited ( ETFS UK ) which is authorized and regulated by the United Kingdom Financial Conduct Authority ( FCA ). The products discussed in this document are issued by GO UCITS ETF Solutions Plc (the Issuer ), an open-ended investment company with variable capital having segregated liability between its sub-funds and is organised under the laws of Ireland as a public limited company. The Issuer has been authorised by the Central Bank of Ireland as a UCITS pursuant to the European Communities (Undertaking for Collective Investment in Transferable Securities) Regulations, 2003 and is structured as an umbrella company with multiple sub-funds. Each sub-fund may issue different classes of shares (the Shares ). The Shares discussed in this document represent the (the Fund ). ETFS UK is required by the FCA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this financial promotion relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its own clients and you should seek your own independent legal, investment and tax or other advice as you see fit. This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares in the United States or any province or territory thereof, where none of the Issuer or the Shares are authorised or registered for distribution and where no prospectus of the Issuer has been filed with any securities commission or regulatory authority. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States. Neither the Issuer nor any securities issued by it have been or will be registered under the United States Securities Act of 1933 or the Investment Company Act of 1940 or qualified under any applicable state securities statutes. This document may contain independent market commentary prepared by ETFS UK based on publicly available information. ETFS UK does not warrant, guarantee or otherwise confirm the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. Any third party data providers used to source the information in this financial promotion make no warranties or claims of any kind relating to such data. Past performance is no indication of future performance. Any past performance included in this document may be based on back testing. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. However, back tested performance is purely hypothetical and is provided in this document solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. The information contained in this financial promotion is neither an offer for sale nor a solicitation of an offer to buy securities. This financial promotion should not be used as the basis for any investment decision. The Shares are products involving a significant degree of risk and may not be suitable for all types of investor. Any decision to invest should be based on the information contained in the prospectus and the Key Investor Information Document of the Issuer (or any supplements thereto) which includes, inter alia, information on certain risks associated with an investment. The price of any securities may go up or down and an investor may not get back the amount invested. Securities are priced in US Dollars and the value of the investment in other currencies will be affected by exchange rate movements. For further details on risks associated with an investment in the securities offered by the Issuer, investors should refer to the section entitled Risk Factors in the relevant prospectus, fund specific supplement and Key Investor Information Document. Third parties: The Fund is not sponsored, promoted, sold or supported in any other manner by International Securities Exchange, LLC (the Index Provider ) nor does the Index Provider offer any express or implicit guarantee or assurance either with regard to the results of using the ISE Cyber Security UCITS Index Net Total Return (the Index ) and/or Index trademark or the Index price at any time or in any other respect. The Index is calculated and published by the Index Provider. The Index Provider uses its best efforts to ensure that the Index is calculated correctly. The Index Provider has no obligation to point out errors in the Index to third parties including, but not limited to, investors and/or financial intermediaries of the Fund. Neither publication of the Index nor the licensing of the Index or Index trademark for the purpose of use in connection with the Fund constitutes a recommendation by the Index Provider to invest capital in the Fund nor does it in any way represent an assurance or opinion of the Index Parties with regard to any investment in the Fund. ETF Securities (UK) Limited 3 Lombard Street London EC3V 9AA United Kingdom t +44 (0)207 448 4330 f +44 (0)207 448 4366 e infouk@etfsecurities.com w etfsecurities.com The intelligent alternative