The Betashares Global Cybersecurity ETF (ASX: HACK) has been a great investment to hold since it listed in 2016, returning an impressive average of around 18.65% per annum.
Of course, past performance is not a guarantee of future performance, but I believe the HACK ETF could continue to deliver for many years to come.
ASX exchange-traded funds (ETFs) are great investments for gaining broad-based exposure to a certain share market, index, or sector. And as its name suggests, the HACK ETF provides exposure to the cybersecurity sector.
It is invested in global giants like Broadcom, Crowdstrike, Palo Alto Networks, and Cloudflare, as well as smaller players such as NCC Group, Radware, and Blackberry.
Of all the possible sectors to invest in, I believe cybersecurity could be among the best due to the integral nature of the service and its potential for future growth.
Defensive nature
So many important and essential services are now carried out online: banking, completing tax returns, shopping, maintenance of medical records, applying for driver's licences and passports, communications, and much more.
Protecting all of these records and information is critical, and governments' and businesses' endeavours to keep citizens and customers safe from cyber threats are now big business. Furthermore, regardless of whether the economy is booming or going through a recession, the need for cybersecurity measures is not really optional.
As such, I believe revenue and profits generated by this collective group of companies are very defensive and unlikely to decline during difficult economic periods.
When a business has a stable earnings base, it could also result in less volatility for its share price, so the HACK ETF has the potential to outperform during bear markets.
Long-term growth of cybercrime
Due to the increasing instances of cybercrime worldwide, I believe increased spending on cybersecurity by governments and businesses is virtually a given.
The picture in Australia is similar to that of the rest of the world. The Australian Signals Directorate's Australian Cyber Security Centre regularly releases cybercrime statistics, which I think reinforces the necessity of the types of companies held by the HACK ETF.
In FY24, the ASD received 36,700 calls to the Australian cyber security hotline, which was an increase of 12% year over year. The average self-reported cost of cybercrime per report for individuals was $30,700, an increase of 17%.
The growth of global e-commerce alone also helps demonstrate the growing importance of widespread cybersecurity.
According to Statista, worldwide e-commerce revenue is expected to grow at a compound annual growth rate (CAGR) of 7.8% between 2025 to 2029, with user penetration expected to rise from 42.4% in 2025 to 49.1% by 2029. The total number of online shoppers is expected to reach 3.6 billion in 2029.
With all of this growth across both the uptake of e-commerce and the occurrence of cybercrime, I'm confident of ongoing revenue growth for the companies within the Betashares Global Cybersecurity ETF over the long term.
