Investing in stocks of a specific industry or a particular theme can be very rewarding, but can be an equally risky proposition. The volatility of these stocks can be high in the short to medium term, as they are more prone to the flow of news impacting their fortunes. One is related to cybersecurity and those looking to invest in stocks of companies in the sector may consider purchasing cybersecurity related exchange traded funds (ETFs). Cyber security ETFs are expected to thrive in the virus-hit global economy.
According to the Internet Crime Complaint Center (IC3), a record number of complaints from the American public in 2020: 791,790 were received, with reported losses exceeding $ 4.1 billion. This represents a 69% increase in the total number of complaints compared to 2019.
Cyber ETFs are thematic ETFs that give investors access to a diversified basket of stocks with exposure to a specific investment or economic theme.
The largest cyber ETF, First Trust’s CIBR (CIBR), which tracks an index jointly created by the Nasdaq and the Consumer Technology Association (CTA) trades around $ 45 million per day and has a total outstanding of over 4, $ 8 billion.
The ETFMG Prime Cyber Security ETF (HACK) is the other ETF that has a portfolio of companies providing cybersecurity solutions including hardware, software and services.
Recently, in a report posted on the Nasdaq website, Phil Mackintosh delved into cybersecurity ETFs. Here are some excerpts:
Regarding growth and potential, the report states: It is probably not surprising that cyber ETFs have experienced strong growth, as data shows that cybercrime is increasing, and with it, losses of businesses affected by it. violations are also increasing. In addition, other studies show that not only is the global cybersecurity market growing, but a majority of CIOs are prioritizing cybersecurity spending for this year, 61% of over 2 000 CIOs surveyed increasing their investments in cybersecurity / information security in 2021. This positions cyber as an industry with long-term potential growth and persistent recurring revenue.
A performance review shows that more recently (during the pandemic) CIBR has started to outperform the broader market. The study also found that the Nasdaq Cyber Index outperforms the broader market for data breaches.
The threat of cybercrime does not appear to be fading quickly and as the world becomes increasingly digital, the need for and demand for new cybersecurity products will increase. Part of your portfolio can be viewed in Cyber ETFs by keeping your risk profile in context.