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HACK ETF: Is It a Fad or the Real Deal?

By U.S. News & World Report

I think we can all agree that companies fighting cybercrime are important. No one wants to get hacked. But that raises the question: Is an exchange-traded fund comprised of 32 of the cybersecurity solution providers a good investment?

Cybersecurity is all over the news these days and examples of computer crime have badly hurt businesses, while exposing the personal information of millions of people. Earlier this year, Target Corp. (ticker: TGT) agreed to settle a class-action lawsuit for $10 million after a 2013 data breach. Last year, Sony Corp. (SNE) was victim of a hack that included employee email, details about employees’ families and salary information. U.S. intelligence officials blamed the hack on the North Korean government.

The PureFunds Cybersecurity ETF (HACK) is a new ETF that started late last year. HACK’s impressive statistics (as of June 30) include a six-month average return in net asset value of 19.32 percent, with a 26.09 percent return since inception in November. This ETF is beating the single-digit returns of the Standard & Poor’s 500 index by a wide margin.

Does this mean you should buy HACK?

It’s a funny thing about investing — there can be great companies, terrific concepts and wonderful ideas — but they don’t always translate into good investments.

What’s your investing plan? Before buying or selling any stock, bond, mutual fund or ETF, figure out an investment strategy. That includes knowing yourself, your risk tolerance and the time frame for the money. Only after you’ve done your initial due diligence should you consider buying specific investments.

What is HACK? HACK is a collection of companies involved in the cybersecurity industry. This ETF is considered a sector fund as its holdings are narrow and deal with a specific section of the market. In order for a company to be included in this ETF, it needs to fit into the fund administrators’ overall methodology.

The ETF includes some well-known names and other lesser-known firms including VeriSign Inc. (VRSN), Juniper Networks Inc. (JNPR), Cisco Systems Inc. (CSCO), FireEye Inc. (FEYE), and Radware Ltd. (RDWR). HACK contains companies from the U.S., Israel, Japan, South Korea and a few others. Its industry exposure spans system software, communications equipment and internet software.

HACK is somewhat diversified geographically and across several technology industries. As is the case with sector funds, overall there’s not a lot of diversification within this technology-related cybersecurity ETF.

Reasons not to invest in HACK. In general, sector funds are risky. They’re more volatile than well-diversified funds such as the S&P 500 ETF (SPY). They also may trade at a premium or discount to their underlying value. That means that the stocks within the ETF might be worth a certain amount, but HACK’s buy or sell price would be either higher or lower.

HACK is new and doesn’t have much of a track record. This means you don’t know how the group of companies have performed under previous market conditions, although the ambitious investor could investigate the individual stocks within the HACK ETF. This makes HACK riskier than other older sector funds.

HACK’s expense ratio of 0.75 percent means that in addition to the commission you pay when you buy or sell the ETF, there’s an annual $75 management fee for every $10,000 invested. That management fee is on the high side for ETFs.

Is HACK a candidate for your portfolio? Cybercrime is rampant. This fear of hacking is causing explosive share growth for HACK investors. After all, if the FBI can get compromised, is there help for the rest of us? HACK investors are betting that these companies will thrive in the current geopolitical climate rampant with cybercrime.

If you want to take a stab at profiting from online crime, investing in a sector fund such as HACK instead of an individual stock is a way to hedge your bet about which company will come out on top.

For investors who evaluate trends and attempt to profit from changes in the economic landscape, HACK may be a decent way to play the cybersecurity industry.

Investing caveat. Overall, much scientific investing research has shown that it’s quite difficult for investors to beat the returns of the overall market. Even those investors who succeed one year are unlikely to repeat their performance over time. That said, many investors enjoy the challenge of attempting to beat the market.

Additionally, there are casual investors who choose to speculate with a small portion of an otherwise conservative portfolio. So, if predicting trends and looking to outperform the markets is your style, then HACK may be worth a look. Unfortunately with its short track record, it’s difficult to perform a fundamental analysis and compare valuation ratios with historic trends for the ETF.

Finally, invest in HACK and sector funds with caution, and be prepared for a wild ride. Also, don’t overlook a cardinal rule of investing — if you pay too much for any security, then it’s a bad investment. So always pay attention to valuations when investing in the stock market.

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HACK ETF: Is It a Fad or the Real Deal? originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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