Could the BetaShares Global Cybersecurity ETF (HACK) be sitting in a perfect storm as this sector faces bigger markets than ever?
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2021 is a year in which the global economy is still experiencing massive change. The coronavirus pandemic last year proved to be an incredibly powerful force for change in this respect.
We are all familiar with the phenomenon of ‘COVID shares’ getting a boost last year. The likes of Afterpay Ltd (ASX: APT), Kogan.com Ltd (ASX: KGN) and Temple & Webster Group Ltd (ASX: TPW) enjoyed massive share price gains.
Many of these company share prices have since calmed down. Investors might have come to terms with the fact that 2020 was probably an outlier year. Despite it bringing forward much change.
But one area that I think all investors could agree is filled with growth prospects is cybersecurity. According to a report in the Australian Financial Review (AFR) yesterday, Nine Entertainment Co Ltd (ASX: NEC) was the subject of a major cybersecurity breach over the weekend. It was a ransomware attack that reportedly left the company unable to broadcast from its Sydney studios.
According to a separate AFR report, Department of Parliamentary Services systems were taken down over the weekend after “suspicious activity” was noticed.
This is a big problem in our modern world. Fortunately, the ASX has an exchange-traded fund (ETF) dedicated to investing in the companies that are taking up the fight.
An ASX HACK?
The BetaShares Global Cybersecurity ETF (ASX: HACK) is a fund that holds a basket of 40 shares in this space. The vast majority of these holdings are US-listed companies, reflecting this country’s dominance in global cybersecurity. However, other countries like Israel, Britain, France, Japan and South Korea are also represented.
Some of the top companies in this ETF include Crowdstrike Holdings Inc, ZScaler Inc, Splunk Inc and Cisco Systems Inc.
Simple logic might dictate that cybersecurity is a growth area. But HACK’s numbers back this thesis up. This fund has returned an average of 21.04% per annum for the past 5 years. That includes a 27.05% return over the past year alone (as of 28 February 2021). Those returns are inclusive of this ETF’s 0.67% per annum management fee.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Zoom Video Communications. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, CrowdStrike Holdings, Inc., and Zoom Video Communications. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Temple & Webster Group Ltd and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia owns shares of AFTERPAY T FPO and BETA CYBER ETF UNITS. The Motley Fool Australia has recommended Amazon, Kogan.com ltd, Temple & Webster Group Ltd, and Zoom Video Communications. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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