What is Cybersecurity?
Cybersecurity can be described as the collective methods, technologies, and processes to help protect the confidentiality, integrity, and availability of computer systems, networks and data, against cyber-attacks or unauthorized access
There are many themes underpinning cybersecurity, such as, cloud security, smarter security, data resilience and recovery, security of things and data security.
There are a few trends leading to increased investments in cybersecurity, such as the risk arising from remote work, increase in complexity of ransomware and increased cyber attacks, and more private investment.
Best Cybersecurity ETFs
Some of the most popular and largest Cybersecurity thematic ETFs are listed in the table below
| ETF | First Trust NASDAQ Cybersecurity | ETFMG Prime Cyber Security | Global X Cybersecurity | iShares Cybersecurity and Tech |
| Exchange | Nasdaq | NYSE | Nasdaq | NYSE |
| Ticker | CIBR | HACK | BUG | IHAK |
| Inception date | 7/7/15 | 11/11/14 | 25/10/19 | 11/6/19 |
| Expense ratio | 0.60% | 0.60% | 0.50% | 0.47% |
| Fund size | 5.09b | 1.55b | 1.13b | 0.53b |
| No. of holdings | 39 | 67 | 30 | 50 |
| Top 10 holdings weighting | 48.27% | 46.01% | 60.38% | 42.65% |
| Top 10 holdings (in order) | CrowdStrike Palo Alto Cloudflare Cisco Systems Zscaler Booz Allen SentinelOne VeriSign Thales F5 | Palo Alto Cloudflare Verisign CrowdStrike Cisco Systems BAE Systems Akamai Norton Leidos Splunk | Palo Alto Check Point CrowdStrike Avast Fortinet Qualys Darktrace Trend Micro Mandiant Zscaler | CrowdStrike Booz Allen Palo Alto Trend Micro Zscaler Citrix Systems Check Point Juniper Networks Okta Akamai |
Comparing the Top 10 holdings across the 4 ETFs, we identified cybersecurity companies such as CrowdStrike and Palo Alto Networks featuring in the Top 10 of all 4 ETFs while Zscaler features in 3 of the ETFs.
First Trust NASDAQ cybersecurity (CIBR)
First Trust NASDAQ cybersecurity ETF (CIBR) is designed to track the performance of companies engaged in the cybersecurity segment of the technology and industrials sectors based on the Nasdaq CTA Cybersecurity Index.
It includes companies primarily involved in the building, implementation, and management of security protocols applied to private and public networks, computers, and mobile devices in order to provide protection of the integrity of data and network operations.
To be included in the index, a security must be listed on an index-eligible global stock exchange and classified as a cybersecurity company as determined by the Consumer Technology Association (CTA).
The top 10 holdings and industry exposure as of 30 June 2022 are as follows:
First Trust NASDAQ cybersecurity ETF aims to track the Nasdaq CTA Cybersecurity Index. Check out the latest developments of the First Trust NASDAQ Cybersecurity ETF at their website here before an investment is made.
ETFMG Prime Cyber Security (HACK)
The ETFMG Prime Cyber Security ETF (HACK) tracks a portfolio of companies providing cyber security solutions that include hardware, software and services that is part of the Prime Cyber Defense Index.
The Prime Cyber Defense Index uses a market capitalization-weighted allocation across the infrastructure provider and service provider categorizations as well as an equal-weighted allocation methodology for all components within each sector allocation
Here are the Top 10 holdings as of 7 September 22
Do also check out the latest developments of the ETFMG Prime Cyber Security ETF at their website here before an investment is made.
Global X Cybersecurity (BUG)
The Global X Cybersecurity (BUG) ETF tracks the Indxx Cybersecurity Index. The index is positioned to benefit from increased adoption of cybersecurity technology, including but not limited to companies whose principal business is in the development and management of security protocols preventing intrusion and attacks to systems, networks, applications, computers, and mobile devices.
To be eligible for the Indxx Cybersecurity Index as a Cybersecurity Company, a company must generate at least 50% of its revenues from cybersecurity activities.
The top 10 holdings in BUG are as follows:
The industry and country breakdown are as follows:
Do also check out the latest developments of the Global X Cybersecurity ETF at their website here before an investment is made.
iShares Cybersecurity and Tech (IHAK)
The iShares Cybersecurity and Tech ETF tracks the NYSE FactSet Global Cyber Security Index. The Index comprises developed and emerging market companies involved in cyber security and technology, including cyber security hardware, software, products, and services.
It seeks to invest in companies at the forefront of cybersecurity innovation, gaining exposure to stocks across the full value chain of cybersecurity and tech industries globally. These companies should have long term growth that can shape the global economic future.
Here are the Top 10 holdings as of 6 September 22
The sector and country breakdown are as follows:
Do also check out the latest developments of the iShares Cybersecurity and Tech ETF at their website here before an investment is made.
Should you invest in Cybersecurity ETFs?
With technological advances permeating into every part of daily life, Cybersecurity is a long term trend that is here to stay. Cybersecurity is an important part of daily life as it protects data from theft and damage, from the infrastructure to the end user. Cybersecurity is necessary for not only individuals but also governments and companies as their systems and networks contain sensitive and valuable data which must be protected.
ETFs are a cheap and easy way to you to gain exposure to the cybersecurity industry.
We have shared with you 4 ETFs you can consider if you wish to bet on cybersecurity. All 4 ETFs are quite varied, with only three companies that are present across all 4 ETFs (namely, CrowdStrike, Palo Alto Networks and Zscaler). The ETFs also have a certain degree of industry diversification as some defence companies also have a cybersecurity division and have been included in these ETFs.