The pros and cons of the BetaShares Global Cybersecurity ETF (HACK) right now

Is cybersecurity still a good sector to invest in?

| More on:
a man wearing spectacles has a satisfied look on his face as he appears within a graphic image of graphs, computer code and technology related symbols while he concentrates on a computer screen

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Betashares Global Cybersecurity ETF (ASX: HACK) has been a very successful investment over the last several years.

The exchange-traded fund (ETF) has delivered an average return per annum of 16.7% since it started in August 2016. There aren't too many ETFs that have delivered that sort of return on the ASX over the same time period.

But, as we know, past performance is not necessarily indicative of future performance. So, I'm going to consider whether the HACK ETF is an investment worth looking at or not.


I'm not an expert on cybersecurity but it seems like there has been an increase in cyber attacks, at least in Australia.

In recent history, we've seen hacks at Optus, Medibank Private Ltd (ASX: MPL), IPH Ltd (ASX: IPH), Latitude Group Holdings Ltd (ASX: LFS), and more.

The Australian Cyber Security Centre (ACSC) report for 2021-2022 showed there were more than 76,000 cybercrime reports over the year, an increase of 13% year over year. The report also said there was an increase in financial losses due to business email compromise (BEC), to more than $98 million.

The ACSC report also said there was a rise in the average cost per cybercrime report to more than $39,000 for small business, $88,000 for medium business, and $62,000 for large business. That represented an average increase of 14%.

While all of this certainly isn't a positive for society, it would logically increase demand for cybersecurity services. According to Statista, the global cybersecurity market is expected to grow from US$248.3 billion in 2023 to $345.4 billion in 2026 and US$478.7 billion in 2030.

According to BetaShares, the HACK ETF is invested in 35 positions, from "global cybersecurity giants" to "emerging players".

Considering the fairly specific allocation the HACK ETF gives, I think it has a very reasonable management fee of 0.67%.

Negatives about the HACK ETF right now

I think the long-term for the Betashares Global Cybersecurity ETF is very positive. However, the more an investment rises in the short-term, I'd suggest it has more chance of getting too far ahead of today's fair valuation.

The HACK ETF has gone up 28% in 2023 to date, though it's still down 8% from the unit price at the end of 2021, so the rise has simply recovered lost ground.

On a traditional valuation metric, it does seem a bit pricey. According to BetaShares, at the end of August 2023, the forward price/earnings (P/E) ratio was 23 times. But, it would be fair to say the HACK ETF may justify a higher P/E ratio because of its growth outlook and how essential (and defensive) cybersecurity services are.

There aren't any strong negatives in my mind, but I would also point out this is a sector-specific ETF, so it's important to seek diversification with other investment options and get an allocation to other sectors.

Foolish takeaway

I think the HACK ETF is one of the most solid investment options around, so I'd be very happy to have it in my portfolio. It could provide a mixture of defensive and growth characteristics.

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 BetaShares Global Cybersecurity ETF. The Motley Fool Australia has positions in and has recommended BetaShares Global Cybersecurity ETF. The Motley Fool Australia has recommended IPH. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ETFs

Cubes placed on a Notebook with the letters "ETF" which stands for "Exchange traded funds".

Are these market-beating ASX ETFs top buys in December?

These ETFs have delivered sensational returns for investors.

Read more »

a woman raises her arm in celebration while looking at her mobile phone on her sofa at home feeling excited about the WiseTech share price rise

Own the Vanguard Australian Shares ETF (VAS)? Here's how it went in November

Own Vanguard's most popular ETF? You did well this month...

Read more »

ETF written on cubes sitting on piles of coins.

The rise of dividend ETFs in Australia: A new era of investment

Dividend ETFs can be great, but make sure you watch out for these key indicators.

Read more »

The letters ETF sit in orange on top of a chart with a magnifying glass held over the top of it

4 top ASX ETFs to buy in December

These ETFs could give your portfolio a boost next month.

Read more »

Five happy friends on their phones.

Buy these exciting ASX tech ETFs in December

These ETF give investors access to some high-quality tech stocks from across the globe.

Read more »

Woman with headphones on relaxing and looking at her phone happily.
Dividend Investing

How I'd aim to build a bulletproof monthly ASX passive income portfolio with just $10,000

If I were building a bulletproof passive income stream today, I wouldn’t invest in just a few high-yielding ASX stocks.

Read more »

Bonds spelt out on block cubes stacked on top of each other in front of a laptop.

Are fixed income ASX ETFs a good buy right now?

Why this could be a good time to look at bonds.

Read more »

Three miners looking at a tablet.

2 ASX mining ETFs to buy in December

Lithium and uranium exposure is a doddle with these ETFs.

Read more »