What is BetaShares Global Cybersecurity ETF all about?
There’s a clue in the name. The ETF gives exposure to an index of companies in the global cybersecurity sector.
It comes with a yearly management fee of 0.67%. You don’t see that cost come out of your bank account, instead, BetaShares will deduct the fees from the value of the ETF.
What shares is the ETF invested in?
Almost half of BetaShares Global Cybersecurity ETF’s portfolio is invested in the systems software businesses. Another 12.9% is invested in communications equipment companies. Then 10% is invested in internet services and infrastructure businesses, 8.9% in IT consulting and other services, 7.6% in application software, 5.8% in semiconductors, 4.9% in aerospace and defence and 1.2% is invested in electronic equipment and instruments.
In terms of the actual holdings, its largest positions are: Crowdstrike, Splunk, Palo Alto Networks, Cisco Systems, Broadcom, Zscaler, Okta, Fortinet, F5 Networks and Akamai Technologies.
Most of the businesses are located in the United States. But there businesses located in the UK, Israel, France, Japan and so on.
How has BetaShares Global Cybersecurity ETF performed?
It’s important to note that past performance is not an indicator of future performance.
Having said that, the ETF has performed really well despite COVID-19. At 29 May 2020, the ETF had delivered returns of around 20% per year since inception in August 2016. Over the past year the return was 27.80%.
Why could it keep performing?
Cybersecurity is going to become more and more important. It seems most businesses are moving their businesses to the cloud, or at least becoming more digital. This trend was occurring anyway, but COVID-19 has really accelerated the push to the internet. Businesses and governments need to protect their data. They need to protect the personal information of their client database. They need to protect their intellectual property.
We’ve seen some large scale data breaches in recent history. No company wants to be the next name on that list. That’s why the demand for the underlying businesses in this ETF probably has a long growth runway. When you think about it from the unstoppable shift to the internet, I think cybersecurity is a pretty compelling defensive idea.
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