Cyber Security

4 Cybersecurity ETFs for Investors

How to invest in Security
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The number of cyberattacks is increasing — here are four cybersecurity ETFs focused on companies looking to combat this growing threat.

Cybersecurity ETFs have gained traction in the last few years thanks to a rise in data breaches and cyberattacks.

The term cybersecurity originated in 1989, and today is defined as the measures taken to protect a computer or computer system against unauthorized access or cyberattack threats.

The number of security incidents is increasing every year, along with the costs companies must pay. In fact, according to a 2021 research report from IBM (NYSE:IBM), a single data breach event could cost an organization US$4.24 million — up 10 percent from the previous year and the highest cost in the 17 years since the first report was issued.


In terms of the overall global cybersecurity sector, a Statista report published in mid-2021 suggests that the market could reach a value of US$345.4 billion by 2026.

There are multiple ways to invest in the cybersecurity market, but exchange-traded funds (ETFs) offer a low-cost way to enter the space. ETF fees and expenses are typically lower than those associated with mutual funds or other types of actively managed financial instruments.

According to ETF.com, there are four cybersecurity ETFs listed in the US that investors can add to their portfolios. Here's a closer look at those security ETFs and their assets under management (AUM). All numbers and figures were current as of market close on October 20, 2021.

1. First Trust NASDAQ CEA Cybersecurity ETF (NASDAQ:CIBR)

AUM: US$5.11 billion; current share price: US$53.18

Launched in July 2015, this ETF tracks the NASDAQ CEA Cybersecurity Index (INDEXNASDAQ:NQCYBR) and has 37 holdings. In total, 93.24 percent of the fund is allocated to US stocks, along with 3.62 percent to UK stocks, 1.22 percent to France-based stocks, 1.51 percent to Japan-based stocks and 0.42 percent to India-based stocks. Its expense ratio is 0.6 percent.

The First Trust NASDAQ CEA Cybersecurity ETF's top cybersecurity stocks include Palo Alto Networks (NYSE:PANW) at a 6.44 percent weighting; Accenture (NYSE:ACN) at a 5.95 percent weighting; and CrowdStrike Holdings (NASDAQ:CRWD) at a 5.8 percent weighting.

2. ETFMG Prime Cyber Security ETF (ARCA:HACK)

AUM: US$2.45 billion; current share price: US$65.83

The oldest of the cybersecurity ETFs on this list is the ETFMG Prime Cyber Security ETF, which began trading in November 2014 and tracks the ISE Cyber Security Index (INDEXNASDAQ:HXR). It has 65 holdings with a 0.6 percent expense ratio. This ETF has had a nearly 20 percent annualized return over the past five years, and is run by ETFMG, a lesser-known company among the goliath ETF managers.

The cybersecurity ETF’s top holdings include Cloudflare (NYSE:NET) at 3.26 percent; Cisco (NASDAQ:CSCO) with a 3.1 percent weighting; and Darktrace (LSE:DARK) at a 2.98 percent weight.

3. GlobalX Cybersecurity ETF (NASDAQ:BUG)

AUM: US$941.27 million; current share price: US$32.87

The newest ETF on this list is the GlobalX Cybersecurity ETF. Founded in October 2019, it tracks a market-cap-weighted global index of companies selected on the basis of revenue related to cybersecurity activities. This fund has an expense ratio of 0.5 percent.

The cybersecurity-focused ETF's top holding include Zscaler, weighted at 8.61 percent; Fortinet (NASDAQ:FTNT) at 7.78 percent; and Palo Alto Networks at 7.34 percent.

4. iShares Cybersecurity and Tech ETF (ARCA:IHAK)

AUM: US$676.92 million; current share price: US$46.39

Last on this cybersecurity ETFs list is the iShares Cybersecurity and Tech ETF. Founded in June 2019, it tracks the NYSE FactSet Global Cyber Security Index (INDEXNYSEGIS:NYFSSEC) with a focus on developed and emerging markets in the cybersecurity industry. This fund has an expense ratio of 0.47 percent.

Its top holdings mirror those of the GlobalX Cybersecurity ETF, although at lower weightings: Zscaler, weighted at 6.1 percent; Fortinet at 5.54 percent; and Palo Alto Networks at 5.4 percent.

This is an updated version of an article originally published by the Investing News Network in 2018.

Don’t forget to follow us @INN_Technology for real-time news updates!

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.

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