Recent times in the investment market have shown how a sector focus has proven to be very successful, of course the big four banks always do their thing but looking over the horizon we are seeing the dance partnering of the not so small telco sector heating right up.

M2, Vocus, Amcom, TPG Telecom, Macquarie Telecom and IINet are all trying to acquire or are in the process of being acquired. A land grab of epic proportions is underway. And it's implications are huge for so many industries. We have been blustering on about the death of traditional media, and the recent arrival of Netflix in this country means another new wave of creative destruction is upon us.

We profiled Netflix and their potential to disrupt entire industries a few years ago when the "network effect" was in it's infancy.

Netflix currently has a market capitalisation of $34 billion USD and is expected to have close to 150 million paying subscribers over the next 5 years. They are expected to spend over $5 billion USD on content next year. Not bad for a company that few thought would make it. The answer is of course "the Internet". 

The World's first Cyber Security ETF, the PureFunds ISE Cyber Security ETF (HACK) was created to provide the market with a transparent vehicle to invest in the increasingly important Cyber Security industry. Anyone that has fallen victim to a cyber attack understands that the fear, consequences and helplessness associated are real.

Hundreds of millions of people around the world have suffered from some form of cyber attack.

 Although a personal cyber attack can seem overwhelming and significant, those that happen on a corporate or government level can be disastrous. In addition to financial losses, cyber attacks have the ability to shut down or manipulate energy infrastructure, weapons defence systems, medical devices, financial markets, transportation networks/vehicles, or harvest highly personal or secret information and a constantly growing amount of other potential threats.

Given the devastating effects cyber attacks can present, it is no coincidence that both corporations and governments around the globe have committed billions of dollars annually in hopes of preventing future attacks. This ongoing digital arms and defence race has vastly grown the size and importance of the cyber security industry.

This constantly evolving battle will force efforts and capital to focus on this essential space. An increase in spending and demand for cyber security solutions may benefit the always morphing Cyber Security Industry. The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the ISE Cyber Security Index.

ISE used a lot of qualitative analysis to determine globally what companies have material focus in providing cyber security solutions in hardware, software, and consulting and analyst services. It found 30 companies that fit that description. The majority of them are in the systems/software area, but they are diverse, including equipment producers and some aerospace defence names.

Ultimately, the portfolio is diversified by subindustry across the technology space, diversified by country—U.S. is about 85% of the portfolio, followed by Israel at 9% and Japan at 3.7%.

Worth a look. I bought some last week.