(The Yorkshire Analysis) — In this article, we delve into the realm of cybersecurity ETFs, offering a curated list of the top options for investors seeking exposure to this dynamic sector.
While the global cybersecurity market has displayed impressive resilience amidst geopolitical uncertainties, it is essential to identify ETFs that align with your investment goals.
Let’s explore the standout performers in this domain.
Cybersecurity Market Overview
The World Economic Forum’s “Global Cybersecurity Outlook 2023” emphasizes the heightened importance of managing cyber risks amid increased worldwide political instability.
An alarming 93% of cyber leaders and 86% of business executives foresee a significant cyber catastrophe within the next two years due to geopolitical turbulence.
According to Canalys, the global cybersecurity market exhibited a robust year-over-year growth of 12.5% in the first quarter of 2023, reaching $18.6 billion. Notably, this growth surpassed that of the broader technology industry. Investment focus was particularly on Secure Web and Email (SSE) security, which experienced a 16.0% surge.
Larger enterprises led the charge, with a 13.3% increase in sales to companies boasting 500+ employees. Palo Alto Networks, Inc. (NASDAQ: PANW) emerged as the preferred vendor for both large and medium-sized enterprises.
Artificial Intelligence in Cybersecurity
The artificial intelligence (AI) segment within the cybersecurity industry is projected to grow at a compound annual growth rate (CAGR) of 23.6%, reaching an estimated market value of $46.3 billion by 2027, as per the International Data Corporation.
Escalating Costs of Cybercrime
Cybersecurity Ventures predicts the cost of cybercrime to escalate to $8 trillion in 2023, with a further surge to $10.5 trillion by 2025, underscoring the critical need for robust cybersecurity measures.
Best Cybersecurity ETFs
5. CI Digital Security ETF (TSE: CBUG.TO)
5-Year Performance (as of August 6, 2023): -1.46%
The CI Digital Security ETF (TSE: CBUG.TO) mirrors the performance of the Solactive Digital Security CAD Hedged Index, offering exposure to the global digital security industry.
Launched on February 24, 2022, this recently introduced fund holds total net assets of C$13.92 million as of August 4, 2023, with an expense ratio of 0.40%.
Palo Alto Networks, Inc. (NASDAQ: PANW) is the leading holding of CI Digital Security ETF, contributing to its growth potential in the cybersecurity sector.
4. ETFMG Prime Cyber Security ETF (NYSE: HACK)
5-Year Performance (as of August 6, 2023): 33.47%
The ETFMG Prime Cyber Security ETF (NYSE: HACK) tracks a diversified selection of cybersecurity companies, spanning hardware, software, and services. Introduced on November 11, 2014, this ETF boasts assets worth $1.4 billion as of August 5, 2023, and operates with an expense ratio of 0.60%.
Booz Allen Hamilton Holding Corporation (NYSE: BAH) is the primary holding of the ETF, offering a wide array of services in management and technology consulting, among others.
3. iShares Digital Security UCITS ETF (LON: SHLD.L)
5-Year Performance (as of August 6, 2023): 48.16%
The iShares Digital Security UCITS ETF (LON: SHLD.L) replicates the STOXX Global Digital Security Open Net Index, encompassing companies generating substantial revenues from digital security-related sectors.
Established on October 29, 2018, this ETF carries an expense ratio of 0.40% and comprises a portfolio of 104 stocks.
Tenable Holdings, Inc. (NASDAQ:TENB) is a noteworthy holding within this ETF, contributing to its growth potential.
2. Global X Cybersecurity ETF (NASDAQ: BUG)
5-Year Performance (as of August 6, 2023): 49.31%
The Global X Cybersecurity ETF (NASDAQ: BUG) focuses on investing in companies poised to benefit from the growing adoption of cybersecurity technology.
Launched on October 25, 2019, this ETF holds net assets worth $655.50 million as of August 4, 2023, with an expense ratio of 0.51%. It boasts a compact portfolio comprising 23 stocks.
Zscaler, Inc. (NASDAQ: ZS) is the largest holding within the Global X Cybersecurity ETF, reflecting its potential to drive growth in the cybersecurity sector.
1. L&G Cyber Security UCITS ETF (BIT: ISPY.L)
5-Year Performance (as of August 6, 2023): 50.40%
The L&G Cyber Security UCITS ETF (BIT: ISPY.L) tracks the performance of ISE Cyber Security UCITS Index.
Established on September 28, 2015, this ETF carries an expense ratio of 0.69%. With a comprehensive replication strategy, it aims to capitalize on significant growth opportunities within the cybersecurity domain.
BlackBerry Limited (NYSE: BB) features as one of the prominent holdings, underlining the ETF’s potential for growth in the cybersecurity sector.
In an era marked by escalating cyber threats, investing in cybersecurity ETFs provides a strategic avenue to participate in this critical sector.
Each of the aforementioned ETFs offers a unique approach to accessing this dynamic market, catering to various risk appetites and investment horizons.
WATCH: ETF Investing/Strategies
It is imperative to conduct thorough due diligence and align your investment strategy with your financial objectives before making any investment decisions.