It doesn’t take too much mental effort to come to the conclusion that the cybersecurity space is a hot one in 2020. Each year, more and more individuals, businesses and governments move functions, relationships and processes online.
This is great for productivity, and efficiency, but not always for security and anonymity. Unfortunately, there aren’t too many cybersecurity companies that list on the S&P/ASX 200 Index (ASX: XJO) or the All Ordinaries Index (ASX: XAO). But there is an exchange-traded fund (ETF) that covers this space. And, as it happens, this ETF is currently rated as a ‘buy’ by analysts at the Motley Fool.
HACK away at cybersecurity
The ETF in question is the BetaShares Global Cybersecurity ETF (ASX: HACK). That’s a killer ticker symbol if there ever was one. Like most ETFs, this fund holds a basket of shares; in HACK’s case all selected from the cybersecurity space.
At the time of writing, it holds 41 different positions. These positions are weighted very heavily towards the United States (at 89.5%). This likely reflects the importance of the US markets in this space. However, it also holds companies from Israel, Britain, Japan, France and South Korea as well.
Its top 6 holdings are as follows: Crowdstrike Holdings Inc, Okta Inc, Zscaler Inc, Accenture plc, Cisco Systems Inc, and Cloudflare Inc.
So how does this ETF’s performance rate against the general (and simplistic) notion that ‘cybersecurity is a growth area’. Well, this ETF has delivered a performance of 16.28% over the past year alone. That includes a whopping 12.7% trailing 12-month distribution yield (as of 30 October).
It’s also delivered an average of 18.33% per annum over the past 3 years. And an average of 16.82% since the funds’ inception in August 2016. Over the past 5 years, the index that the fund tracks (the Nasdaq Consumer Technology Association Cybersecutirty Index) has returned an average of 14.8% per annum.
Note, HACK does charge a not-insignificant 0.57% per annum management fee – something to keep in mind.
Is HACK a buy today?
The BetaShares Global Cybersecurity ETF is currently rated as a ‘buy’ by the analysts at the Motley Fool’s Pro Investing service. Doc Mahanti, Ryan Newman and the team at Pro like (indeed, are excited about) this ETF’s basket of global companies which are all leaders in their spaces. They also like the exposure to the long term rise of cybersecurity spending that this ETF provides. As well as the raw growth this sector is experiencing.
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Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of BETA CYBER ETF UNITS. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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