Emerging 'Cybersecurity ETF' Garnering Attention

US Administration and Big Tech Companies
Announce Security Enhancement Policies and Investments
Related Funds Yield Over 40% in One Year

[Asia Economy Reporter Park Jihwan] As the U.S. administration under Joe Biden and big tech companies step up efforts to strengthen cybersecurity, exchange-traded funds (ETFs) investing in related industries are gaining attention.

On the 25th (local time), President Biden held a meeting with major companies operating in IT, finance, and key industries to discuss cybersecurity. Immediately after the meeting, Microsoft (MS) announced plans to invest $20 billion (approximately 23.47 trillion KRW) over five years, including upgrading government agency security systems and supporting security training. Google also pledged to invest $10 billion over five years to enhance cybersecurity. Apple, Amazon, IBM, JP Morgan, and others attending the meeting also revealed plans to increase investments related to cybersecurity.

In the U.S., there were consecutive cyberattacks such as the Colonial Pipeline ransomware attack in May and the JBS ransomware attack in June. President Biden is promoting the expansion of security-related policies, including signing an executive order on online authentication.

In the securities industry, the U.S. government’s policies and major companies’ increased investments are expected to lead to revenue growth and improved performance for cybersecurity-related companies. Park Seungjin, a researcher at Hana Financial Investment, analyzed, "This is likely to become a momentum for the stock price rise of ETFs themed around cybersecurity." Among cybersecurity-themed ETFs, the most popular product is the U.S.-listed First Trust NASDAQ Cybersecurity ETF (CIBR). It holds major cybersecurity companies such as Zscaler (7.22%), CrowdStrike (6.50%), Accenture PLC (6.37%), and Cisco (6.09%) in its portfolio. Its return over the past year is 42.79%, significantly outperforming the Nasdaq’s 31.18% return.

The ETFMG PRIME CYBER SECURITY ETF (HACK), first listed in November 2014, is a pioneering cybersecurity ETF. It includes companies developing cybersecurity hardware and software as well as security service providers. The Global X Cybersecurity ETF (BUG) is a product of Global X, the U.S. ETF subsidiary of Mirae Asset Management. It invests in major security companies such as Fortinet and CrowdStrike, whose over 50% of sales come from cybersecurity sectors. Similarly, iShares Cybersecurity and Tech (IHAK) includes companies with more than 50% of their revenue generated from cybersecurity. These ETFs have also shown solid returns. Over the past year, HACK, BUG, and IHAK recorded returns of 30.81%, 42.05%, and 33.54%, respectively.

This content was produced with the assistance of AI translation services.