If you’re looking for a way to invest in the growing cyber security industry, then you may want to take a look at the Betashares Global Cybersecurity ETF (HACK). This ETF offers investors exposure to some of the world’s leading cyber security companies, and it has been outperforming the broader market so far this year. In this blog post, we will take a closer look at HACK and see why it may be a good investment option for you!
BetaShares – Company Outline
BetaShares is a well-known Australian issuer of ETFs and with over A$750 million in funds under management, you can see investors trust them with their capital. The company offers a range of products, including Australian and international shares, fixed income, commodities and currency. BetaShares was founded in 2013 and has quickly become one of the largest and most popular ETF issuers in Australia.
What is BetaShares Global Cybersecurity ETF (HACK)?
If you are looking to invest in the ever growing Global Cybersecurity Sector, the BetaShares Global Cybersecurity ETF (ASX: HACK) could be a really good option for you.
This ASX listed Exchange Traded Fund allows investors to gain exposure to the world’s leading cybersecurity companies involved in both cybersecurity and cybersecurity solutions. Some of the major holdings of HACK are companies such as Cisco Systems, Palo Alto Networks and Accenture. If you are anything like me those names don’t really mean a whole lot (apart from Cisco being the brand on my work phone), but more on them later!
The ETF began trading on the ASX in August 2016 and has grown to over A$730 million in funds.
Performance
Since its inception in 2016 HACK has returned an astounding investment return of 20.36% Per Annum. When comparing this to the 21% return of the underlying cybersecurity index that HACK aims to track we can see it has done a bloody good job at tracking the index.
The above chart taken from the Sharesight Share Checker shows how much growth a $10,000 investment in HACK from 2016 would have. As you can see it has provided a 17%+ return on investment compounding yearly!
Performance in the later years has really accelerated as Cybersecurity has become paramount in our everyday lives.
When comparing this Cybersecurity ETF to a popular ASX200 index fund such as Betashares A200 fund we can see it has outperformed the ASX, providing nearly double the return yearly. Whilst this is an amazing result it is crucial to note that the level of risk may be higher, normally higher returns mean higher risk (even in the diversified ETF world). Just remember the age old saying Past Performance is not an indicator of Future Performance!
Fees
The fees charged by HACK are 0.67% per annum ($67 per $10,000 invested), which is a little higher than other index tracking ETFs like A200 with fees of 0.07% ($7 per $10,000 invested). But as you can see from these charts this hasn’t held back growth in any way!
Fees are always an important consideration when choosing what investment to make but if you want exposure to Cybersecurity this is just the premium you have to pay.
Like all other ETF’s the only fees payable are the Brokerage fees charged by your broker and the annual fees (which come out of the ETF itself), there are no account fees payable.
Top 3 holdings of the Betashares HACK ETF and why they are leading companies in the Global Cybersecurity Sector.
Cisco Systems (6.6% of Holdings)
Cisco Systems (NASDAQ: CSCO) is a U.S based technology company that designs, manufactures and sells networking equipment. The company has historically been dominant in the enterprise sector, with its routers and switches making up a large part of corporate networks around the globe. However, in recent years Cisco has made a concerted push into the consumer market and Cybersecurity Market.
Cisco is a major player in the Cybersecurity Market, and has been for some time. The company’s routers and switches form the backbone of many corporate networks, and its security products are some of the most popular on the market.
Accenture (6.3% of Holdings)
Accenture (NYSE: ACN) is a multinational professional services company that provides services in strategy, consulting, digital, technology and operations. The company has a large cybersecurity services practice, and offers a range of services in the area, from risk management to incident response.
Palo Alto Networks (6.1% of Holdings)
Palo Alto Networks (NYSE: PANW) is a network security company that offers a range of products for the enterprise and consumer markets. The company’s products include Next-Generation Firewalls, Application Programming Interfaces (APIs), and cloud security tools.
Are there risks associated with investing in cybersecurity stocks?
If you are a stock picker then yes there could be risks are. For one, the global cybersecurity sector is incredibly competitive, with new startups popping up all the time. This makes it difficult to determine which companies are the best cybersecurity stocks to invest in. With so many new players and a constantly evolving threat landscape, it’s hard to stay ahead of the curve and know which companies will still be in business in five or ten years.
Investing in an ETF such as HACK mitigates that risk because it gives you a diverse group of companies to invest in. No longer does the investor have to worry about picking which global cybersecurity stock to invest in, because you own all of them! (In one single ASX trade might I add)
Frequently asked questions about Betashares Global Cybersecurity ETF
What is Cybersecurity?
Cybersecurity is a term that you’ve probably heard before, but what does it actually mean? Cybersecurity is all about protecting your computer and the information on it from hackers and other online threats. This can include anything from installing antivirus software to using strong passwords.
Who Runs Betshares Global Cybersecurity ETF (ASX:HACK)
HACK is run by Betashares, Read our company Bio at the top of the page for more information.
Is it safe to invest in HACK?
Well it’s a Cybersecurity ETF.. so yeah of course it’s safe!
In all seriousness, it really depends on what you mean by Safe. HACK is managed by one of the leading providers of ETFs in Australia and has been around for 6+ years, there is no risk of them taking your money and running if that’s what you are concerned about.
On the other hand, if you want to know if you should pile all of your savings into HACK due to the great returns… well that’s not really a smart thing to do and we can’t tell you if this investment suits your financial situation. Always have a chat with a professional for personalised financial advice and consider your personal investment strategy before buying into ETFs.
Should this global cybersecurity ETF make an appearance in your portfolio? We personally think it makes sense – it gives you access to an ever growing industry that is becoming more and more relevant every day.
Is Hack an Index Fund?
Yes! HACK is an index fund that tracks the underlying Nasdaq Consumer Technology Association Cybersecurity Index. This means that your investment will be automatically diversified across the entire Index, which gives you instant exposure to some of the world’s leading cybersecurity stocks.
Does the HACK ETF pay Dividends?
Yes! HACK pays a Semi-Annual Dividend. The most recent distribution yield was around 2.7%. You can elect to have the dividends reinvested into more HACK ETF shares (our preferred method for supercharging wealth), or you can choose to receive it in cash.
How do you buy shares in Betashares Global Cybersecurity ETF (HACK)?
You can buy shares in the HACK ETF directly through your online Broker such as SelfWealth, Commsec or Pearler. Unlike actively Managed funds this is just like buying shares in any other company on the ASX.
In Summary, Is HACK a good investment?
We think that the Betashares Global Cybersecurity ETF (ASX:HACK) is a bloody great investment decision for those of us that want exposure to the Global Cybersecurity Industry.
Having a stake in this ETF gives you instant exposure to some of the best companies without having to pick them individually. The higher fees that HACK charges are definitely on the higher end of ETF’s but nothing that should deter investors from investing.
All in all this Global CyberSecurity ETF from Betashares is definitely something you should look at adding to your watchlist!