May 24, 2022

Want to Invest in Cybersecurity? Here Are Some ETFs to Consider

As cyberattacks become more frequent, the demand for cybersecurity-related services is naturally booming. And that may be something investors can take advantage of.

One of the most direct options is to invest in an exchange-traded fund that focuses on cybersecurity. Funds that invest in providers of hardware, software, products and services in cybersecurity have continued to crop up since the first came to market in 2014.

“If you think cybersecurity is an interesting area for growth, but you don’t know which company is best positioned to take advantage of this growth, an ETF could be a good bet,” says

Ben Johnson,

director of global exchange-traded fund research at

Morningstar.

Share Your Thoughts

Are you interested in exchange-traded funds that focus on cybersecurity? Join the conversation below.

There are caveats. Thematic funds tend to be riskier than broad market plays, and so aren’t suitable as a building block of a core portfolio, Mr. Johnson says. In addition, he says, by the time you’re seeing headlines around a particular investing theme, investor enthusiasm generally is already priced in.

Investors who own a cybersecurity ETF likely won’t need more than one, Mr. Johnson says. Roughly half of cybersecurity ETF holdings overlap, on average, which means their performances can be dramatically different. But, Mr. Johnson says, the leading stocks typically are also found in tech and growth funds, which can lead a portfolio to overconcentrate in cybersecurity.

Here is a look at a few of the cybersecurity ETFs available.

ETFMG Prime Cyber Security ETF

(HACK) was the first ETF to target the cybersecurity industry and tracks the Prime Cyber Defense Index. The fund holds the shares of 59 companies and covers such subcategories as systems software, communications equipment, application software, research and consulting services.

Inception: Nov. 11, 2014

Expense ratio: 0.60%

Net assets as of June 5: $2.17 billion

One-year annualized market price return as of June 4: 32.04%

Three-year: 15.90%

Five-year: 19.20%

Top holdings as of June 5:

Cisco Systems Inc.,

a developer and manufacturer of networking, cloud and security products,

BlackBerry Ltd.

, a developer of security software and services, and

Proofpoint Inc.,

an enterprise security company.

First Trust Nasdaq Cybersecurity ETF

(CIBR) seeks investment results that correspond generally to the price and yield (before fees and expenses) of its index, the Nasdaq CTA Cybersecurity Index. To be included in this fund, which consists of 40 holdings, 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. For instance, each security must have a world-wide market capitalization of at least $250 million and have a minimum three-month average daily trading volume of $1 million.

Inception: July 6, 2015

Expense ratio: 0.60%

Net assets as of June 4: $3.66 billion

One-year annualized market price return as of June 4: 34.04%

Three-year: 17.90%

Five-year: 20.10%

Top holdings as of June 4: Cisco Systems,

Accenture

PLC, a provider of management consulting and technology services, and

CrowdStrike Holdings Inc.,

a provider of cloud-based security technology.

Global X Cybersecurity ETF

(BUG), according to its fund summary, focuses on companies that are mainly developing and managing security protocols for computer systems, software and hardware and devices. The fund, with 32 holdings, tracks the Indxx Cybersecurity Index, whose companies generate at least 50% of their revenues from cybersecurity activities.

Inception: Oct. 25, 2019

Expense ratio: 0.50%

Net assets as of June 3: $361.4 million

One-year annualized market price return as of June 4: 38.34%

Three-year: N/A

Five-year: N/A

Top holdings as of June 4:

Zscaler Inc.,

a cloud-based information-security platform, CrowdStrike Holdings and

Fortinet Inc.,

a developer and seller of cybersecurity solutions.

iShares Cybersecurity & Tech ETF

(IHAK) seeks to track the investment results of the NYSE FactSet Global Cyber Security Index, composed of developed- and emerging-market companies involved in cybersecurity and technology, including hardware, software, products and services.

Inception: June 11, 2019

Expense ratio: 0.47%

Net assets as of June 4: $515.6 million

One-year annualized market price return as of June 4: 32.86%

Three-year: N/A

Five-year:N/A

Top holdings as of June 4: Fortinet, Proofpoint and CrowdStrike.

WisdomTree Cybersecurity Fund

(WCBR) consists of the shares of 25 high-growth companies expected to drive key cybersecurity developments and innovations over the medium to long term. It seeks to track the price and yield performance, before fees and expenses, of the WisdomTree Team8 Cybersecurity Index, which focuses on seven cybersecurity themes, including cloud security capabilities, privacy and smart security solutions. Companies in the index must have a minimum market capitalization of $300 million and a minimum three-month average daily trading volume of $1 million, among other qualifications.

Inception: Jan. 28, 2021

Expense ratio: 0.45%

Net assets as of June 4: $18.8 million

One-year annualized market price return as of June 4: N/A

Three-year: N/A

Five-year: N/A

Top holdings as of June 4:

Cloudflare Inc.,

a web infrastructure and website security company,

Datadog Inc.,

a monitoring service for cloud-scale applications, and

Rapid7 Inc.,

a security analytics and automation provider.

ProShares Ultra Nasdaq Cybersecurity

(UCYB) seeks daily investment results, before fees and expenses, that correspond to two times the daily performance of its benchmark, the Nasdaq CTA Cybersecurity Index.

Inception: Jan. 19, 2021

Expense ratio: 0.98%

Net assets as of March 31: $2.5 million

One-year annualized market price return as of June 4: N/A

Three-year: N/A

Five-year:N/A

Ms. Winokur Munk is a writer in West Orange, N.J. She can be reached at [email protected]

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

in Tech
Related Posts

Google Settles Antitrust Case Over Advertising Practices

June 7, 2021

June 7, 2021

The French competition authority alleged Google’s advertising server gave the company’s online ad auction house an advantage in advertising auctions....

IBM Shuffles Executive Ranks With Departure of President

July 2, 2021

July 2, 2021

International Business Machines Corp. said its second-highest-ranking executive, Jim Whitehurst, is leaving the company two years after he joined through...

Amazon Has Signed Multiple Companies to Its Telehealth Service

June 9, 2021

June 9, 2021

Amazon. AMZN 0.52% com Inc. has signed multiple companies to its Amazon Care telehealth service and will need thousands of...

Self-Driving Cars Could Be Decades Away, No Matter What Elon Musk Said

June 5, 2021

June 5, 2021

In 2015, Elon Musk said self-driving cars that could drive “anywhere” would be here within two or three years. In...

Tech Talent Migrates to Collaboration Startups as Hybrid Work Comes Into Its Own

June 14, 2021

June 14, 2021

Executives at some of the world’s largest technology firms are leaving prime jobs to join startups that build communications and...

Microsoft Launches Windows 11 in a Reboot for the App-Economy Age

June 24, 2021

June 24, 2021

Microsoft Corp. MSFT 0.39% on Thursday unveiled an overhaul of its Windows operating system designed to update the software that...

Google Removes Diversity Executive Over Blog Post About Jews

June 3, 2021

June 3, 2021

Google’s headquarters in Mountain View, Calif. Photo: Cayce Clifford for The Wall Street Journal Updated June 3, 2021 7:43 pm...

How 5G Will Take Esports to a Whole New Level for Gamers and Fans

May 26, 2021

May 26, 2021

In June, armed young men with the latest high-tech gear are expected to descend on Beijing to shoot at their...

Google to Open Its First Permanent Retail Store This Summer in New York City

May 20, 2021

May 20, 2021

Google will open its first-ever permanent retail store in New York City in coming weeks, a bet that a physical...

Apple’s Tim Cook Faces Pointed Questions From Judge on App Store Competition

May 21, 2021

May 21, 2021

Apple Inc. AAPL -1.48% Chief Executive Tim Cook faced tough questions from the federal judge who will decide whether the...

Driver-Assistance Crashes Attract Closer U.S. Scrutiny

June 29, 2021

June 29, 2021

Federal regulators are tightening their oversight of car crashes that involve advanced driver-assistance or automated-driving features, a shift that follows...

Quanergy to Go Public Through SPAC Deal

June 22, 2021

June 22, 2021

Quanergy Systems Inc., a provider of lidar sensors and 3-D perception software, is going public through a combination with a...

Your AirPods Aren’t ‘Magically Connecting’? Here Are Some Things to Try.

May 30, 2021

May 30, 2021

Apple’s website touts the AirPods’ ability to “connect magically” to iPhones and “move seamlessly” between iPhones, Apple Watches, iPads and...

Trump Considers Contenders to Be His New Social-Media Outlet After Big Tech Crackdown

May 14, 2021

May 14, 2021

Donald Trump, sidelined by Twitter Inc. and Facebook Inc., has been talking with numerous platforms as he seeks a new...

Amazon Policy Leads to Higher Consumer Prices, D.C. Suit Alleges

May 25, 2021

May 25, 2021

WASHINGTON—The District of Columbia filed an antitrust lawsuit against Amazon.com Inc. AMZN 0.36% on Tuesday, alleging the company blocks sellers...