Investment fund for cyber crime hunters to float

Annabelle Williams
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Cyber criminals will be hacked off
The first investment fund focused solely on companies battling cyber crime lists on the London Stock Exchange today.

The exchange traded fund (ETF), called the ETFS ISE Cyber Security Ucits ETF, will launch in London nearly a year after it made its debut on the New York Stock Exchange.

The fund, which invests in an index of the top 33 companies focused on cyber security, has amassed $1bn (£658m) from investors in the US, a huge amount for a niche product.

Cyber crime costs the global economy $445bn a year, according to research by insurer Allianz Global Corporate & Specialty (AGCS).

In the UK alone, the cost of online attacks has been estimated at £2.8bn or 0.16 per cent of the country’s GDP, says AGCS.

A spate of cyber security breaches at some of the world’s biggest companies has caused grave concerns over privacy. The most recent high profile attack was at Ashley Madison, a site which facilitates extra-marital affairs. Details of 33m users were leaked in the attack.

Although attacks at governments and multi-nationals including Sony, MasterCard and Visa have hit the headlines, smaller crimes are rife and there were 42.8m cyber attacks in 2014 alone.

But companies providing a defence against computer criminals are a fast-growing industry. There are more than 200 companies globally whose business includes fighting cyber crime. The sector has a nearly 10 per cent compound annual growth rate through to 2020, with the industry expected to be worth $170bn by then.

“A little over a year ago the industry reached a tipping point,” says Christian Magoon of Magoon Capital. He added that ETF providers had looked at creating a dedicated investment fund for the sector several years ago, but the industry was not mature enough.