Search

4 Cybersecurity ETFs for Growth Investors

While the term cybersecurity originated in 1989, the industry has gained significant traction in the last few years thanks to a rising number of data breaches and cyberattacks.


Cybersecurity is defined as the measures taken to protect a computer or computer system against unauthorized access or cyberattack threats.

The number of security incidents is increasing every year, along with the costs. In fact, according to a 2019 research report from IBM (NYSE:IBM), a single data breach event could cost an organization nearly US$4 million — up 12 percent since 2014.

In terms of overall cyberthreats, a Juniper Research report on cybercrime, also from 2019, suggests that the cost of such malicious attacks will rise to US$5 trillion by 2024.


A report issued by the Canadian government in 2018 also highlights the global market, stating that cybercrimes were projected to cost US$600 billion in economic losses that year. The report also states that the cybersecurity technology industry is anticipated to reach over US$202 billion by 2021 worldwide.


There are multiple ways to invest in the cybersecurity market, but exchange-traded funds (ETFs) offer a low-cost way to enter the space. ETF fees and expenses are typically lower than those associated with mutual funds or other types of actively managed financial instruments.




According to ETF.com, there are four cybersecurity ETFs listed in the US that investors can add to their portfolios. Here’s a closer look at those security ETFs and their holdings.



1. First Trust NASDAQ CEA Cybersecurity ETF (NASDAQ:CIBR)

AUM: US$1.93 billion; current price: US$34.79


Launched in July 2015, this ETF tracks the NASDAQ CEA Cybersecurity Index (INDEXNASDAQ:NQCYBR) and has 44 holdings. In total, 80.71 percent of the fund is allocated to the software and IT services sector, with 8.79 percent in communications and networking equipment. Its expense ratio is 0.6 percent.


The First Trust NASDAQ CEA Cybersecurity ETF’s top cybersecurity stocks include CrowdStrike Holdings (NASDAQ:CRWD) at a 6.64 percent weighting; Splunk (NASDAQ:SPLK) at a 6.19 percent weighting; Okta (NASDAQ:OKTA) weighted at 6.1 percent; and Cisco (NASDAQ:CSCO) at a 5.62 percent weighting.



2. ETFMG Prime Cyber Security ETF (ARCA:HACK)

AUM: US$1.42 billion; current price: US$47.15


The oldest of the cybersecurity ETFs on this list is the ETFMG Prime Cyber Security ETF, which began trading in November 2014 and tracks the ISE Cyber Security Index (INDEXNASDAQ:HXR)). It has 60 holdings with a 0.6 percent expense ratio, and its assets under management (AUM) stand at over US$1.42 billion. This cybersecurity ETF has had an 8.57 percent annualized return since its inception, and is run by ETFMG, a lesser-known company amongst the goliath ETF managers.


The ETF’s top holdings include Cisco with a 3.73 percent weighting; Cloudflare (NYSE:NET) at 3.25 percent; Sailpoint Technologies (NYSE:SAIL) at 3.2 percent; and Splunk at a 3.11 percent weight.



3. iShares Cybersecurity and Tech ETF (ARCA: IHAK)

AUM: US$94.57 million; current price: US$32.97


Next on our cybersecurity ETFs list is the iShares Cybersecurity and Tech ETF. Founded in June 2019, it tracks the NYSE FactSet Global Cyber Security Index (INDEXNYSEGIS:NYFSSEC) with a focus on developed and emerging markets in the cybersecurity industry. This newer fund has an expense ratio of 0.47 percent and over US$94.57 million in AUM.


Its top holdings include DocuSign (NASDAQ: DOCU) weighted at 5.39 percent; Zscaler (NASDAQ: NZ) at 4.65 percent; and Okta at a 4.4 percent weighting.



4. GlobalX Cybersecurity ETF (NASDAQ:BUG)

AUM: US$29 million; current price: US$21.43


The newest ETF on this list is the GlobalX Cybersecurity ETF. Founded in October 2019, it tracks a market-cap-weighted global index of companies selected on the basis of revenue related to cybersecurity activities. This fund has an expense ratio of 0.5 percent and US$29 million in AUM.


The ETF’s top holding include Zscaler, weighted at 8.8 percent; Okta at 6.58 percent; Palo Alto Networks (NYSE: PANW) at 5.97; and Fortinet (NASDAQ: FTNT) at 5.84 percent.







* The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained on our Site constitutes a solicitation, recommendation, endorsement, or offer by De Angelis & Associates or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content on this site is information of a general nature and does not address the circumstances of any particular individual or entity.

Article partially appeared on investorsnews.com


Credit: investorsnews.com, Russell 2000 Index, Nasdaq

© De Angelis & Associates 2020. All Rights Reserved.

0 comments