September 28, 2015 / 4:56 PM / 4 years ago

Cyber-security ETF debuts on London Stock Exchange

LONDON Sept 28 (Reuters) - A new exchange-traded fund (ETF) tracking cyber-security companies debuted on the London Stock Exchange on Monday, the first of its kind on the London market, according to the bourse.

The ETF Securities Cyber Security ETF will specialise in following cyber-security firms operating in a sector which has raised more than $2.3 billion globally so far this year, according to industry data.

“(Cyber-security) has been a great performing sector already ... so it’s definitely an interesting space,” Jeremy Steinson, head of trading at Killik & Co, said.

Global cyber-security investments increased to $2.5 billion in 2014, according to data firm CB Insights, as corporations strive to protect themselves against the growing threat of cyber attacks.

“I think the timing really reflects that this is a very real concern to a lot of companies, and many investors want to be part of that story and be part of the defence,” said Adam Laird, passive investment manager at Hargreaves Lansdown.

The ETF, a basket of securities traded like a stock on the exchange, will give investors exposure to tech companies such as Japanese security firm FFRI INC, British anti-virus firm Sophos and U.S. IT company Cisco Systems, according to ETF Securities’ website.

It fell 1.6 percent on Monday, closing at 619 pence.

Over 100 ETFs have listed on the London Stock Exchange in 2015, which has a market share of 32 percent of ETF trading in Europe.

Despite the popularity of cyber security ETFs in the United States, such as the PureFunds ISE Cyber Security ETF which launched in November 2014 and has a $1.1 bln market cap, investors are cautious when it comes to investing in a narrow sector.

Hargreaves Lansdown’s Laird warned that the firms ETFs offer exposure to tend to be younger, growth companies which may not have earnings records or pay dividends regularly, making them riskier than the market as a whole.

“These are usually not long-term, core portfolio assets - they’re really add-ons to an otherwise diversified portfolio.” (Reporting by Kit Rees)

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