Stop Cyber Threats: Invest Cyber ETFs.
Cybersecurity - where are we?
In my 15 Dec 2023 post (click here ! to read), I have shared that cybersecurity is a growing area in Information Technology.
This will be even more important as countries become more digital.
Daily news on scam, shows that cyber threats are real, malicious, and not going away anytime soon.
Main Cybersecurity Trends:
Based on Gartner 2024 report, below are some significant trends:
Organizations to invest to withstand cyberattacks from third-party vendors.
"Identity-first" security approach is becoming important, especially Identity & Access Management (IAM).
Overtime, Artificial intelligence (AI) is likely to play a bigger role in defense against cyberattacks.
Cybersecurity Resilience Gap:
Separately, the World Economic Forum’s post - “2024 Global Cybersecurity Outlook (GCO)” has highlighted another growing concern — organizations maintaining viable cyber resilience are rapidly diminishing, down -31% since 2022.
Widening gap between cyber-resilient organizations and those struggling to keep pace, poses serious threats to overall integrity of the entire cybersecurity ecosystem.
This comes as:
More organizations are struggling to keep up with cyber threats.
Partly due to high cost of cybersecurity tools, services and talent.
Smaller organizations and developing countries are most affected.
Investment Opportunities.
Now that it confirmed that cybersecurity is here to stay, is it timely to turn this IT growing trend into an investment strategy on Cybersecurity ETFs?
Due to real estate constraint, only the Top 3 ETFs will be shared.
Want to know the remaining 7 ETFs? Leave a comment below and will share them in a future post.
#3. $iShares Cybersecurity and Tech ETF(IHAK)$.
5-Year Share Price Performance as of 21 Mar 2024: +21: 87.69%
ETF aims to replicate the performance of NYSE FactSet Global Cyber Security Index, that consists of developed and emerging market companies in cybersecurity and technology sectors, including hardware, software, products, and services.
As of 20 Mar 2024, the fund:
Holds net assets valued at $840 million.
Has an expense ratio of 0.47%.
A portfolio comprising 35 stocks.
iShares Cybersecurity and Tech ETF (NYSE:IHAK) is one of the best cybersecurity ETFs to buy.
$Fortinet(FTNT)$ a global provider of cybersecurity and networking solutions, is one of the top holdings of this ETF.
#2. $Global X Cybersecurity ETF(BUG)$.
5-Year Share Price Performance as of 21 Mar 2024: +89.15%
This ETF aims to invest in companies poised to benefit from the growing adoption of cybersecurity technology.
The companies will be those that specialize in (a) developing and managing security protocols to prevent intrusion and (b) attacks on systems, networks, applications, computers, and mobile devices.
This ETF seeks to replicate the performance of the Indxx Cybersecurity Index before fees and expenses.
As of 20 Mar 2024, the ETF:
Holds net assets of $787.15 million.
Has an expense ratio of 0.51%.
A portfolio consisting of 24 stocks.
$Gen Digital (GEN)$ is one of the top holdings of Global X Cybersecurity ETF.
Globally, the company provides cyber safety solutions to consumers.
Their offerings include (a) security and performance products for PCs, Macs, and mobile devices, (b) real-time protection against malware, viruses, and online threats, (c) as well as identity theft protection solutions such as Norton and LifeLock.
#1. $First Trust NASDAQ Cybersecurity ETF(CIBR)$.
5-Year Share Price Performance as of 21 Mar 2024: +104.22%
This ETF aims to replicate the performance of the Nasdaq CTA Cybersecurity Index before fees and expenses.
This index tracks companies operating in the cybersecurity segment of the technology and industrials sectors, primarily engaged in developing, implementing, and managing security protocols for networks, computers, and mobile devices to safeguard data integrity and network operations.
As of 20 Mar 2024, the ETF:
Holds net assets valued at $6.65 billion.
Has an expense ratio of 0.59%.
A portfolio comprising 30 stocks.
$Palo Alto Networks(PANW)$ - a global provider of cybersecurity solutions, is one of the top holdings of this ETF.
Their offerings include (a) firewall appliances, (b) software, and (c) security management solutions like Panorama.
On 20 Feb 2024, PANW announced their Q2 2024 earnings:
Revenue: $1.98 Billion vs market expectations of $1.97 Billion.
Earnings per share (non-GAAP): $1.46 vs market expectations of $1.30 per share.
My viewpoints : (mine & mine only)
I am surprised to find the market capitalization for #1 ETF ($6.86 Billion) is so different from #2 ETF ($793.91 Million) and #3 ETFs ($861.7 Million).
All 3 ETFs’ trading volumes (average) are nothing to scream about either, its 825,762 (#1), 245,321 (#2) and 106,906 (#3) respectively. They are rather low.
Are there further upsides to these ETFs as their current price is closed to their respective peak already?
High probability, given that Cybersecurity as investment will be a mid to long term investments.
It is in investors’ interest to examine the list of stocks held by each ETF.
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