Apparently, cybersecurity stocks and exchange-traded funds don't want their cloud counterparts to have all the fun because Monday's batch of all-time high ETFs contains several cybersecurity offerings.
Besides the obvious catalyst of strength in the broader technology, there are some fundamental factors buoying the ascent of cybersecurity ETFs. Some industry observers are saying that the coronavirus is creating unprecedented opportunities for nefarious hackers to target corporations and governments and that following the virus, companies and government entities will need to boost spending to win the fight against cybercriminals.
Cyber warfare also sprouted up in the wake of the Minneapolis protests with attacks targeting city government and law enforcement computer networks.
With that in mind, here are some of the cybersecurity that are winning.
Global X Cybersecurity ETF (BUG)
The Global X Cybersecurity ETF BUG, which debuted last October, follows the Indxx Cybersecurity Index and provides exposure to “companies that stand to potentially benefit from the increased adoption of cybersecurity technology, such as those whose principal business is in the development and management of security protocols preventing intrusion and attacks to systems, networks, applications, computers, and mobile devices,” according to Global X.
Relative to competing legacy funds in this category, BUG's lineup is smaller by market value with a weighted average market capitalization of $9.55 billion. The smaller size leads to some elevated valuations as BUG trades at 60.10 times this year's earnings, but the fund is higher by 21.25% this year, providing some credibility to those lofty valuations.
BUG is the least expensive fund in this category with an annual fee of 0.50%, or $50 on a $10,000 investment.
BlueStar Israel Technology ETF (ITEQ)
The BlueStar Israel Technology ETF ITEQ isn't a dedicated cybersecurity ETF, but that's alright. Outside of the U.S., Israel is the most dominant country when it comes to producing cybersecurity software and services and ITEQ is the ETF most levered to that theme.
As a broader ETF, ITEQ offers exposure to some other fast-growing technology segments and themes beyond cybersecurity, including 3D printing, autonomous driving, artificial intelligence and defense technology. Wix WIX is the largest of ITEQ's 59 components at a weight of 10.45%.
First Trust Nasdaq Cybersecurity ETF (CIBR)
About a month shy of its fifth birthday, the First Trust Nasdaq Cybersecurity ETF CIBR is the second-oldest cybersecurity ETF and a category behemoth with $1.73 billion in assets under management.
Investors remain fond of CIBR as highlighted by 2020 inflows of $412.19 million.
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