The rising frequency of target-based attacks is driving strong demand for cybersecurity solutions, making the sector a key growth area. As digital threats increase, investing in cybersecurity ETFs is a strategic choice. Therefore, investors might consider buying top cybersecurity ETFs: Global X Cybersecurity ETF (BUG), iShares Cybersecurity and Tech ETF (IHAK), and First Trust NASDAQ Cybersecurity ETF (CIBR).
In today’s digital economy, stricter government regulations and expanding IoT trends heighten the need for robust cybersecurity. The rise of cloud adoption demands scalable security, while AI-driven cyberattacks call for advanced countermeasures. Additionally, increased workplace device usage requires strong endpoint protection, further fueling the demand for comprehensive cybersecurity solutions.
With rising security demands across sectors like finance, manufacturing, automotive, healthcare, and data, driven by advanced threats like ransomware and deepfakes, the global cybersecurity market is projected to grow from $193.73 billion in 2024 to $562.72 billion by 2032 at a 14.3% CAGR. This strong growth trajectory presents promising investment opportunities in cybersecurity for the future.
Furthermore, cybersecurity ETFs offer diversified exposure to top companies in the sector, reducing the risk of investing in individual stocks while simplifying portfolio management. With this promising outlook, let's dive into the top three Technology Equities ETFs, starting with number three.
ETF #3: Global X Cybersecurity ETF (BUG)
BUG is an exchange-traded fund launched and managed by Global X Management Company LLC. It invests globally in public equity markets, focusing on companies that develop and manage security protocols to prevent intrusions on systems, networks, applications, computers, and mobile devices, known as cybersecurity companies. It targets the information technology sector, investing in growth and value stocks across various market capitalizations. BUG seeks to track the performance of the Indxx Cybersecurity Index using a full replication technique.
With $787.70 million in AUM, the fund has a total of 23 holdings. BUG’s top holding is Check Point Software Technologies Ltd. (CHKP) with an 8.19% weighting, followed by Fortinet, Inc. (FTNT), with a 7.41% weighting, and Palo Alto Networks, Inc. (PANW) with 7.33%.
BUG has an expense ratio of 0.50%, lower than the category average of 0.58%. It currently has a NAV of $32.33. Its fund outflows came in at $3.37 million over the past month.
BUG has gained 10.3% year-to-date and 34.4% over the past year to close the last trading session at $32.33.
BUG’s strong outlook is reflected in its POWR Ratings. The ETF has an overall rating of A, translating to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
It has an A grade for Buy & Hold and Trade. Of the 119 ETFs in the B-rated Technology Equities ETFs group, it is ranked #26. Click here to access all of BUG’s POWR Ratings.
ETF #2: iShares Cybersecurity and Tech ETF (IHAK)
IHAK is an exchange-traded fund launched by BlackRock, Inc. It is managed by BlackRock Fund Advisors and invests in public equity markets worldwide. The fund focuses on stocks of companies operating in information technology and cybersecurity, including hardware, software, products, and services. It invests in both growth and value stocks across diversified market capitalizations and seeks to track the performance of the NYSE FactSet Global Cyber Security Index using a representative sampling technique.
With $912 million in assets under management (AUM), IHAK’s top holding is SentinelOne, Inc. (S) with a 5.59% weighting, followed by Varonis Systems, Inc. (VRNS), with a 5.17% weighting, and FTNT, with 5.13%. It has a total of 34 holdings.
It has an expense ratio of 0.47%, lower than the category average of 0.58%. It currently has a NAV of $50.33. IHAK’s fund inflows came in at $133.88 million over the past year.
IHAK has gained 29.5% over the past year and 11.9% over the past six months to close the last trading session at $50.47.
IHAK’s POWR Ratings reflect this promising outlook. The IHAK’s overall A rating equates to a Strong Buy in our proprietary rating system.
IHAK has an A grade for Buy & Hold and Trade. It is ranked #22 in the same group. To access all the POWR Ratings for IHAK, click here.
ETF #1: First Trust NASDAQ Cybersecurity ETF (CIBR)
CIBR is an exchange-traded fund launched and managed by First Trust Advisors LP. It invests in public equity markets worldwide, focusing on stocks of companies operating in information technology, software and services, and technology hardware and equipment sectors. The fund targets both growth and value stocks across diversified market capitalizations and seeks to track the performance of the NASDAQ CTA Cybersecurity Index using a full replication technique.
With $6.94 billion in assets under management (AUM), CIBR’s top holding is CrowdStrike Holdings, Inc. Class A (CRWD) with an 8.74% weighting, followed by Broadcom Inc. (AVGO), with an 8.43% weighting, and Cisco Systems, Inc. (CSCO), with 8.12%. CIBR has a total of 33 holdings.
CIBR has an expense ratio of 0.59%, higher than the category average of 0.58%. It currently has a NAV of $39.83. Its fund inflows came in at $139.92 million over the past year.
The ETF pays an annual dividend of $0.27, which yields 0.43% on the current price. It has a four-year average dividend yield of 0.51%. Its dividend payouts have increased at a CAGR of 64.4% over the past three years and 34% over the past five years.
CIBR has gained 35.9% over the past year and 16.2% over the past nine months to close the last trading session at $62.58.
CIBR’s POWR Ratings reflect its promising prospects. The ETF’s overall A rating equates to a Strong Buy in our proprietary rating system.
CIBR has an A grade for Buy & Hold, Peer, and Trade. In the Technology Equities ETFs group, it is ranked #6. Click here to access all of CIBR’s POWR Ratings.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
CIBR shares were trading at $62.04 per share on Tuesday afternoon, down $0.54 (-0.86%). Year-to-date, CIBR has gained 15.44%, versus a 23.01% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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