Amplify Cybersecurity ETF (HACK) seeks to track the EQM Cybersecurity Index, which measures the performance of global companies that derive at least 50% of their revenue from cybersecurity products and services including threat detection, network security, data protection, and cloud security solutions.
How It Works
HACK uses a passively managed, modified market-capitalization-weighted approach that screens for pure-play cybersecurity companies globally. The underlying index applies revenue thresholds to ensure holdings have significant cybersecurity exposure, then weights companies by market cap with individual position caps to prevent over-concentration. The fund rebalances quarterly and typically holds 30-50 companies ranging from established security giants to emerging threat intelligence specialists.
Key Features
- Pure-play cybersecurity focus requiring 50% minimum revenue exposure, avoiding diluted technology funds with minimal security allocation
- Global diversification across U.S., Israeli, and European cybersecurity leaders including both software and hardware security providers
- Launched in 2024 to capture growing demand for cybersecurity investments amid increasing digital threats and regulatory requirements
Risks
- This ETF can lose value if cybersecurity spending slows during economic downturns, as companies often defer security investments when budgets tighten
- Technology sector concentration means the fund could decline 40-50% during tech selloffs, as cybersecurity stocks often trade with high volatility
- Small portfolio size increases single-stock risk, where one major holding's earnings disappointment could significantly impact overall fund performance
Who Should Own This
Best suited as a satellite holding (5-15% of portfolio) for growth-oriented investors with high risk tolerance and 3+ year time horizons seeking thematic exposure to cybersecurity trends. Appropriate for investors who understand technology sector volatility and want to capitalize on increasing digital security spending across enterprises and governments.