Nasdaq Trade Talks - How to Gain Exposure to Global Innovation in Cybersecurity
Jill Malandrino: Welcome to Nasdaq Trade Talks, I'm Jill Malandrino, Global Markets Reporter at Nasdaq. Joining me is Kara Marciscano, Senior Research Analyst at WisdomTree to discuss the launch of a new cybersecurity ETF, ticker WCBR. Kara, it's great to have you with us. Welcome to Trade Talks.
Kara Marciscano: Thanks for having me, Jill. I'm very excited to be talking WCBR with you today.
Jill Malandrino: Why cybersecurity, and why launch now?
Kara Marciscano: Sure. So if we didn't know before the pandemic, we certainly know now how dependent our global economy is on digital infrastructure and connectivity just simply to operate. So in order to have economic growth, we really need to protect these systems and all of this infrastructure and the data that resides within it. So the cybersecurity industry is an essential component to economic growth.
It's an industry that not only protects our digital infrastructure, but it helps to detect and respond to cyber threats when they do happen, because they do happen, without disrupting workflow. So there is an important component of business continuity to the industry that sometimes gets missed, so that's why cyber, but why cyber today, and that's the question WisdomTree wanted to address with our ETF. With the digital acceleration we've seen, especially over the last 12 months or so, there is just mounting, growing need to ensure that as the pace of adoption of technology continues, that the number of cyber vulnerabilities doesn't outpace that growth.
So, I like to think about it as a contact tracing web, right? So you have one exposure, but one exposure or additional technology can lead to a number of cyber threats. And we have to ensure that those vulnerabilities are mitigated. So companies have to invest in cybersecurity projects and services to mitigate risk. So, bringing it back to WisdomTree and our products, we do believe that the cybersecurity industry is incredibly well-positioned to meet this growing need, and that not only are they entering a new age of a shift towards growth, and historic shift towards growth, but that the companies captured specifically in WCBR, W Cyber, are positioned for attractive relative growth and returns over the long term.
Jill Malandrino: So, tell us more about the WCBR launch. What makes it unique?
Kara Marciscano: So, first and foremost, it tracks the WisdomTree Team8 Cybersecurity Index. So we're leveraging proprietary data from a firm called Team8. And just to give you a little bit of background on Team8, Team8's a global venture group that specializes in the cybersecurity industry. They have an amazing community of executives, and their leaders include former directors at national intelligence agencies, so they are very, very well-versed on the industry. And we're using their data to identify companies that are most exposed to the seven cyber themes that they believe are going to drive growth for the industry going forward.
And so, our methodology is not only identifying those companies that are most exposed to things identified by Team8, but we're also selecting companies that are growing the fastest as measured by revenue growth. So, the end result for WCBR is a really unique basket of companies that is exhibiting high growth rates, double premier benchmarks for growth in tech like the Nadaq 100 Index. And we don't think investors are necessarily getting exposure to these stocks through their traditional allocations, so it is a very, very high growth, super focused way to gain exposure to the cybersecurity industry that is rapidly evolving and we really do feel that we have a pulse on the market by partnering with Team8.
Jill Malandrino: Yeah, that's really interesting how you're leveraging Team8. And to wrap up here, what's the process behind the stock selection for WCBR?
Kara Marciscano: So, there's really two key tenets. So there's the growth component, which is the revenue growth stream that I talked about, and then the pure play exposure where partnering with a company like Team8 is so, so key because we really do have a line of sight into companies that are most exposed to those seven themes. So growth, and focus, and then we sort of tilt the weight towards the higher growth, most exposed companies, and then sort of tilt away a little bit from the companies towards the bottom where they might have exposure to only one theme, and have a slower growth rate. But it is a very, very unique basket of stuff, and we're very, very excited to be launching it today.
Jill Malandrino: All right, Kara. Appreciate the insight. Thanks for joining us on Trade Talks, and thanks for joining me, I'm Jill Malandrino, Global Markets Reporter at Nasdaq.
Kara Marciscano: Thanks, Jill.
Nasdaq 100 Index: Includes 100 of the largest domestic and international non-financial companies listed on The Nasdaq Stock Market based on market capitalization. The Index reflects companies across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain securities of financial companies, including investment companies.
Investors should carefully consider the investment objectives, risks, charges and expenses of the Fund before investing. To obtain a prospectus containing this and other important information, call 866.909.9473 or visit WisdomTree.com. Read the prospectus carefully before you invest.
There are risks associated with investing, including possible loss of principal. The Fund invests in cybersecurity companies, which generate a meaningful part of their revenue from security protocols that prevent intrusion and attacks to systems, networks, applications, computers, and mobile devices. Cybersecurity companies are particularly vulnerable to rapid changes in technology, rapid obsolescence of products and services, the loss of patent, copyright and trademark protections, government regulation and competition, both domestically and internationally. Cybersecurity company stocks, especially those which are internet related, have experienced extreme price and volume fluctuations in the past that have often been unrelated to their operating performance. These companies may also be smaller and less experienced companies, with limited product or service lines, markets or financial resources and fewer experienced management or marketing personnel. The Fund invests in the securities included in, or representative of, its Index regardless of their investment merit and the Fund does not attempt to outperform its Index or take defensive positions in declining markets. The composition of the Index is heavily dependent on quantitative and qualitative information and data from one or more third parties, and the Index may not perform as intended. Please read the Fund’s prospectus for specific details regarding the Fund’s risk profile.
The WisdomTree Team8 Cybersecurity Index is designed to track the performance of companies primarily involved in providing cybersecurity-oriented products that meet Index eligibility requirements. You cannot invest directly in an index.
Statements concerning financial market trends are based on current market conditions, which will fluctuate.
WisdomTree Funds are distributed by Foreside Fund Services, LLC in the U.S. only. Foreside Fund Services, LLC is not affiliated with the other entities mentioned.
Kara Marciscano is a registered representative of Foreside Fund Services, LLC.