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Cyber Security ETFs to Thrive in the Virus-Hit Economy

Sanghamitra Saha

With the coronavirus outbreak infecting around 1.5 million worldwide, a third of the global population is now under lockdown. This has resulted in an unprecedented rise in Internet usage due to work-and-learn-from-home, online retailing of daily essentials, mobile payments to avoid contact transactions and socializing (read: Rising Work-From-Home Trend to Boost 5 Industries & ETFs).

Now, the rampant usage of Internet has raised the risks of cyber threats. In case of work-from-home, proprietary business data is being accessed from personal computers and laptops that may not have the same level of security as in-office setups.

Hackers have already started taking advantage of the coronavirus panic. There have been “phishing efforts by sending out emails designed to look as if they’re official notices from the World Health Organization.”

Then there are email fraudsters who are misguiding executives to transfer money to finance vendors, operations and virus-related-response activities. The FBI too cautioned about increased phishing schemes, specifically business email compromise (BEC).

Public-sector organizations are facing massive problems, per mckinsey. The Mckinsey report added that a big government entity in North America suffered a distributed denial-of-service during this phase. Also, a major hospital in Europe faced a cyberattack that “forced it to suspend scheduled operations, shut down its IT network, and move acute-care patients to another facility.”

To combat such threats, an international group of nearly 400 volunteers has been formed with expertise in cybersecurity at major companies like Microsoft MSFT and Amazon AMZN. The prime motto of the group would be to protect “hacks against medical facilities and other frontline responders to the pandemic.” Michael Sentonas, Global CTO of CrowdStrike CRWD said that “crisis management and incident response plans need to be executable by a remote workforce.”

No wonder, cyber security stocks are good bets for Q2. Below we highlight a few cyber-security ETFs that should be closely tracked during the pandemic (read: 6 Industries & Their ETFs to Protect You from Virus in Q2).

iShares Cybersecurity and Tech ETF IHAK)

The underlying NYSE FactSet Global Cyber Security Index comprises developed and emerging market companies involved in cyber security and technology, including cyber security hardware, software, products and services. Citrix, Docusign and Akamai Technologies are the top three holdings of the fund.

The fund charges 47 bps in fees. The United States takes about 78.7% of the fund followed by Israel (11.6%). The fund is down 3% in the past month compared with 10.5% decline in the S&P 500 and an 8% drop in the Nasdaq (as of Apr 7).

ETFMG Prime Cyber Security ETF HACK 

The underlying Prime Cyber Defense Index utilizes a rules-based investment methodology to select a diverse group of companies actively involved in the cyber security industry. The 54-holdings fund charges 60 bps in fees. Cisco, Cloudflare and Akami are the top three holdings of the fund. HACK has lost 7.6% in the past month.

 First Trust NASDAQ CEA Cybersecurity ETF CIBR

The underlying Nasdaq CTA Cybersecurity Index tracks the performance of companies engaged in the cybersecurity segment of the technology and industrials sectors. It charges 60 bps in fees. The fund has declined 6.5% in the past month (read: Solid Q4 Earnings Power Cybersecurity ETFs).

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Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
ETFMG Prime Cyber Security ETF (HACK): ETF Research Reports
 
First Trust NASDAQ Cybersecurity ETF (CIBR): ETF Research Reports
 
CrowdStrike Holdings Inc. (CRWD) : Free Stock Analysis Report
 
iShares Cybersecurity and Tech ETF (IHAK): ETF Research Reports
 
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