The BetaShares Global Cybersecurity ETF (ASX: HACK) is in focus for Aussies after the Optus hack.
Whether it was a hack or a cybersecurity malfunction, Optus' security breach has put the concept of cybersecurity in front of Australians.
There are plenty of reasons to want businesses and organisations to have top-notch security systems set up. A key reason is the fact that they have so many of our details, such as the typical ones like name, date of birth, address, phone number and email address. It could cause problems if those details were to get into the wrong hands.
How has the BetaShares Global Cybersecurity ETF performed?
Optus told customers about the attack on Thursday 22 September. That was on the public holiday to honour the Queen.
So, since market close on Wednesday 21 September, the ETF has fallen by around 2%.
But, there are a few different things to keep in mind with this decline.
First, it comes at a time when the global share market is seeing significant volatility.
Over the same period – since Wednesday last week – the Vanguard MSCI Index International Shares ETF (ASX: VGS) has fallen by an almost-identical amount of around 2% as well.
The global share market is contending with a number of issues including high inflation and higher interest rates, and a sell-off of the British pound within the last week.
Changes in how investors value businesses in this economic environment have hurt the share prices of many businesses. The Betashares Global Cybersecurity ETF has fallen in value by nearly 24% since the start of 2022.
It'd be understandable for investors to think that demand for cybersecurity services will increase in light of a major cybersecurity issue. But, keep in mind that many of the cybersecurity businesses inside this ETF earn their profit from across the world. What happens to an Australian telco isn't likely to spur huge demand globally, in my opinion.
What shares are in the portfolio?
Each business within this portfolio offers different services.
Investors may have heard of some of the 37 holdings including Broadcom, Cisco Systems, Infosys, Crowdstrike, Palo Alto Networks, Cyberark, Zscaler, Fortinet, Booz Allen Hamilton, Science Applications, F5 Networks, SentinelOne and Verisign.
Whilst it can be hard to identify which specific business will be the winner for a long-term trend, like the growth of cybersecurity, buying a basket of them allows us to capture the overall growth of the sector.
As outlined by fund provider BetaShares, according to Statista, the global cybersecurity market is expected to grow from $137.6 billion in 2017 to $248.3 billion in 2023.
Why could this ETF work in some investor portfolios? BetaShares says:
Australian investors currently have few local options for gaining exposure to the fast-growing cybersecurity sector.
There are very few pure-play cybersecurity firms listed on the Australian share market, and the overall technology sector accounts for less than 2% of Australian equity market capitalisation.
