Down 23% since mid-April, is the HACK ETF a golden opportunity?

Cybersecurity is a growing industry as organisations and households look to protect themselves against cybercriminals.

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Key points

  • Cybercrime is predicted to cost the world economy more than $10 trillion by 2025
  • Cybersecurity businesses such as Crowdstrike are involved in protecting households and businesses from criminals
  • The Betashares Global Cybersecurity ETF has fallen in value recently, but it gives exposure to leading global businesses in the sector

The Betashares Global Cybersecurity ETF (ASX: HACK) has fallen in value by more than 20% over the last couple of months. It has been a difficult time for the HACK exchange-traded fund (ETF), as it has for many businesses.

When companies fall in value, it is worth considering whether an investment is more attractive or not. The situation with inflation and interest rates is capturing many headlines.

Only time will tell when will inflation slow and how high interest rates have to go to help cool the economy.

The cybersecurity industry is seeing long-term growth as businesses, governments, and households look to protect themselves. In 2018, the global cybersecurity market was worth around US$152 billion. By 2023, it’s expected (according to Statista) to reach US$248.3 billion.

With that underlying growth in mind, is the HACK ETF now an attractive opportunity?

The HACK ETF was rated as a buy

In mid-April 2022, one expert said that the Betashares Global Cybersecurity ETF is worth a spot in every investor’s portfolio.

Felicity Thomas from Shaw and Partners said in a Livewire interview that the HACK ETF was her pick:

The reason I’ve chosen this is because cybercrime is meant to cost the world $10.5 trillion by 2025 [according to Cybersecurity Ventures], which is huge. It also has amazing names in it like CrowdStrike. In a connected world where everyone is attached to their devices, it’s becoming the biggest problem that we’re all facing.

The HACK ETF has dropped around 20% since the date of that positive commentary from Thomas.

What’s in the portfolio?

Thomas alluded to some “amazing names” in the portfolio, so let’s look at the biggest positions in the portfolio.

On 16 June 2022, these were the biggest holdings and their weightings:

  • Crowdstrike (6.5%)
  • Palo Alto Networks (6.4%)
  • Cisco Systems (6.3%)
  • Zscaler (4.6%)
  • Booz Allen Hamilton (4%)
  • VMware (4%)
  • Leidos (3.8%)
  • Sailpoint Technologies (3.6%)
  • Juniper Networks (3.3%)
  • Check Point Software (3.3%)

There are a total of 40 positions in the ETF.

How has it performed?

Past performance is certainly no guarantee of future performance. However, when including the annual management fee of 0.67%, investors can see that it returned an average of 15.9% per annum in the five years to 31 May 2022.

However, the six months to 31 May 2022 showed a drop of 18.3% for the Betashares Global Cybersecurity ETF. HACK ETF shares are currently valued at $8.19.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended BETA CYBER ETF UNITS, Cisco Systems, and CrowdStrike Holdings, Inc. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended VMware. The Motley Fool Australia has positions in and has recommended BETA CYBER ETF UNITS. The Motley Fool Australia has recommended CrowdStrike Holdings, Inc. 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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