As the world becomes more digital, with increased communication and financial transactions carried out online, cybersecurity has become a major concern. Cyber-attacks, data breaches, and online frauds have become a significant threat to individuals, companies, and governments worldwide. In this respect, investing in cybersecurity has become increasingly popular, as business owners and investors seek to protect their information and assets. In this article, we will highlight the top cybersecurity ETFs to watch in 2021.
What is an ETF?
An Exchange-Traded Fund (ETF) is a type of investment fund traded on stock exchanges, much like stocks. They are made up of a basket of assets, such as stocks, bonds, or commodities, which are designed to track a specific index. ETFs are increasingly popular among investors, as they offer diversification and low expense ratios compared to other investment products.
Top cybersecurity ETFs to watch in 2021
1. Global X Cybersecurity ETF (BUG)
The Global X Cybersecurity ETF is a fund that invests in companies in the cybersecurity industry. The ETF tracks the Solactive Cybersecurity Index, which includes companies involved in internet security, data protection, and software and hardware development for security purposes. Some of its top holdings include Cisco, Palo Alto Networks, and Zscaler.
2. First Trust NASDAQ Cybersecurity ETF (CIBR)
The First Trust NASDAQ Cybersecurity ETF is the largest and most liquid cybersecurity ETF, with over $5 billion in assets under management. The ETF tracks the NASDAQ CTA Cybersecurity Index, which includes companies involved in cybersecurity hardware, software, and services. Some of its top holdings include CrowdStrike, Fortinet, and Palo Alto Networks.
3. ETFMG Prime Cyber Security ETF (HACK)
The ETFMG Prime Cyber Security ETF is a fund that seeks to invest in companies that provide hardware, software, and consulting services to defend against cyber-attacks. The fund tracks the ISE Cyber Security Index, which is made up of companies that generate at least 50% of their revenue from cybersecurity. Some of its top holdings include FireEye, Proofpoint, and Splunk.
4. iShares Cybersecurity and Tech ETF (IHAK)
The iShares Cybersecurity and Tech ETF is a fund that provides exposure to companies at the intersection of cybersecurity and technology. The ETF tracks the NYSE FactSet Global Cyber Security Index, which includes companies involved in internet security, data protection, and software and hardware development for security purposes. Some of its top holdings include CrowdStrike, Okta, and Proofpoint.
Conclusion
Investing in cybersecurity has become crucial, as cyber-attacks continue to affect businesses and individuals worldwide. The aforementioned ETFs provide investors with an opportunity to invest in various cybersecurity companies, offering diversification and providing a hedge against potential cyber threats. As with any investment, investors should conduct their due diligence before making investment decisions and consult with a financial advisor.
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