As cybercrimes and cyberattacks affect more individuals, companies, and governments, the global cybersecurity market is expected to expand at a healthy compound annual growth rate (CAGR) of 10.9% by 2028. Investors seeking to profit from this trend may consider holding a wide range of cybersecurity stocks through exchange-traded funds (ETFs). In a young, fast-growing industry, betting on individual stocks is particularly risky. Cybersecurity ETFs provide diversification across the industry, thereby avoiding the risks associated with trying to pick individual winners.
- In the past year, the performance of the cyber security industry has slightly underperformed the broader market.
- The cybersecurity ETFs that track the best total returns in a year are BUG, CIBR, and IHAK.
- The highest holding of BUG and IHAK is Fortinet Inc., and the highest holding of CIBR is Zscaler Inc..
There are four ETF transactions in the United States that focus on cybersecurity, excluding reverse ETFs, leveraged ETFs and ETFs with less than US$50 million in assets under management (AUM): Global X Cybersecurity ETF (BUG), First Trust Nass Duck Cybersecurity ETF (CIBR), iShares Cybersecurity and Technology ETF (IHAK) and ETFMG Prime Cybersecurity ETF (HACK).
The total return of the cybersecurity industry as measured by the Standard & Poor’s Kensho Cybersecurity Index in the past 12 months was 34.8%, while the S&P 500’s total return as of August 11, 2021 was 35.5%, which is slightly inferior Big market. Based on the performance of the past year, the best-performing cybersecurity ETF is BUG. We checked the top three best cybersecurity ETFs below. All figures are as of August 12, 2021.
- Performance over one year: 40.9%
- Expense rate: 0.50%
- Annual dividend yield: 0.08%
- Three-month average daily volume: 336,157
- Assets under management: $668.2 million
- Date of Establishment: October 25, 2019
- Issuer: Mirae Asset Global Investment Co., Ltd.
BUG tracks the Indxx Cyber Security Index, which measures the performance of 32 companies operating in the cyber security industry. ETF invests in companies that can benefit from the increasing adoption of network security technologies, including companies that provide security against intrusions and attacks on systems, networks, applications, computers, and mobile devices.
BUG focuses on cybersecurity growth stocks in the entire market value range. About three-quarters of its holdings are located in the United States, and the remaining quarter are located in Israel, the United Kingdom, Japan, and other countries. Its top three holdings include Fortinet Inc. (FTNT), an enterprise security solution provider; Zscaler Inc. (ZS), a cloud-based information security company; and CrowdStrike Holdings Inc. (CRWD)’s Class A shares, a subsidiary of the company The company provides security for the cloud era.
- Performance over one year: 40.4%
- Expense rate: 0.60%
- Annual dividend yield: 0.19%
- Three-month average daily volume: 546,974
- Assets under management: US$4.4 billion
- Date of establishment: July 7, 2015
- Issuer: First Trust
CIBR is a multi-share growth fund that targets cybersecurity stocks listed in the United States. The ETF tracks the Nasdaq CTA Cybersecurity Index, which aims to measure the performance of cybersecurity companies in the technology and industrial sectors. Each shareholding of the fund must be classified by the Consumer Technology Association as a cybersecurity company with a market value of at least $250 million and meet certain liquidity requirements.
CIBR’s top three holdings include Zscaler Inc.; Class A shares of Accenture PLC (ACN), a management and technical consulting service provider registered in Ireland; and Class A shares of CrowdStrike Holdings Inc.
- Performance over one year: 34.2%
- Expense rate: 0.47%
- Annual dividend yield: 0.14%
- Three-month average daily volume: 112,949
- Assets under management: $613.1 million
- Date of Establishment: June 11, 2019
- Issuer: BlackRock Financial Management
IHAK tracks the New York Stock Exchange FactSet Global Cybersecurity Index, which is composed of cybersecurity and technology stocks with a market capitalization of more than $225 million. Its goal is to invest in companies that are at the forefront of cyber security innovations that have strong long-term growth potential and the ability to shape the future of the global economy.
The vast majority of IHAK’s assets are in the United States, while the rest are in Israel, Japan, Canada, and Taiwan. The fund’s largest holdings include Fortinet Inc.; Zscaler Corporation; and DocuSign Inc. (DOCU), an electronic agreement management company.
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