Cybersecurity Trends: Top 5 ETFs For Cyber Defense

In this article, we discuss 5 ETFs for cyber defense. If you want to read our discussion on the cybersecurity industry, head directly to Cybersecurity Trends: Top 10 ETFs For Cyber Defense. 

5. Amplify Cybersecurity ETF (NYSE:HACK)

5-Year Share Price Performance as of March 21: 57.56%

Amplify Cybersecurity ETF (NYSE:HACK) aims to mirror the total return performance of the Nasdaq ISE Cyber Security Select Index, tracking companies engaged in cybersecurity solutions, including hardware, software, and services. As of March 20, 2024, Amplify Cybersecurity ETF (NYSE:HACK) holds net assets worth $1.8 billion with an expense ratio of 0.60%. Established in November 2014, Amplify Cybersecurity ETF (NYSE:HACK)’s portfolio consists of 24 stocks. It is one of the best cybersecurity ETFs to buy. 

Cisco Systems, Inc. (NASDAQ:CSCO) is one of the top holdings of Amplify Cybersecurity ETF (NYSE:HACK). The company designs, manufactures, and sells networking and IT products globally. On March 18, Cisco Systems, Inc. (NASDAQ:CSCO) announced that it has completed its acquisition of Splunk, days after the $28 billion deal got approved by the European Commission. 

According to Insider Monkey’s fourth quarter database, 60 hedge funds were bullish on Cisco Systems, Inc. (NASDAQ:CSCO), compared to 64 funds in the prior quarter. 

Oakmark Fund made the following comment about Cisco Systems, Inc. (NASDAQ:CSCO) in its Q3 2023 investor letter:

“Cisco Systems, Inc. (NASDAQ:CSCO) is the leading networking solutions company. Networking equipment becomes more important as businesses modernize their IT infrastructure, and Cisco is well positioned to capture this demand given its broad portfolio and highly effective go-to-market strategy. Cisco is transitioning away from selling mainly transactional hardware and toward selling more software and subscriptions. This shift is expected to accelerate revenue growth, improve operating margins and build recurring revenue. Despite these notable business improvements, Cisco still trades near a trough valuation relative to the S&P 500 Index. More recently, Cisco announced its intention to acquire Splunk, a leader in security and observability, adding to its already strong position in the increasingly important security market. At a low-teens multiple of our estimate of normalized earnings, Cisco is trading comfortably below our estimate of intrinsic value.”

4. Evolve Cyber Security Index Fund – Hedged Units (TSE:CYBR.TO)

5-Year Share Price Performance as of March 21: 72.20%

Evolve Cyber Security Index Fund – Hedged Units (TSE:CYBR.TO) ranks 4th on our list of the best cybersecurity ETFs. Evolve Cyber Security Index Fund – Hedged Units (TSE:CYBR.TO) aims to mirror the performance of the Solactive Global Cyber Security Index Canadian Dollar Hedged, investing mainly in stocks of companies engaged in cybersecurity through hardware and software development. As of March 20, 2024, the ETF’s portfolio comprises 34 stocks, with assets under management totaling $182.707 million. The management fee stands at 0.40%.

Booz Allen Hamilton Holding Corporation (NYSE:BAH) is one of the top holdings of Evolve Cyber Security Index Fund – Hedged Units (TSE:CYBR.TO). The company provides management and technology consulting, analytics, engineering, digital solutions, mission operations, and cyber services globally. On January 30, Booz Allen Hamilton Holding Corporation (NYSE:BAH) declared a $0.51 per share quarterly dividend, an 8.5% increase from its prior dividend of $0.47. The dividend was distributed on March 1. 

According to Insider Monkey’s fourth quarter database, 30 hedge funds were long Booz Allen Hamilton Holding Corporation (NYSE:BAH), compared to 34 funds in the last quarter. 

Baron Asset Fund made the following comment about Booz Allen Hamilton Holding Corporation (NYSE:BAH) in its second quarter 2023 investor letter:

“We re-initiated a position in Booz Allen Hamilton Holding Corporation (NYSE:BAH), the premier provider of outsourced civil and military consulting services to the federal government. We believe that Booz’s consultants (65% of whom possess security clearances) are best in class at tackling sensitive and high priority cybersecurity, intelligence, defense, and spending efficiency projects for various government agencies. Under longtime CEO Horacio Rozanski, the company has thoughtfully invested in AI, cybersecurity, software, and other advanced technologies. It had remained ahead of its peers and is an important partner providing the government mission-critical and highly technical solutions. In addition, Booz is the largest single provider of AI services to the federal government, which we believe will be a source of ongoing, outsized growth.

We believe the ongoing U.S. military rivalry with Russia and China will provide a tailwind for increased defense budget growth and enhance the demand for Booz’s services. Booz expects to continue outgrowing its consulting peers by 2% to 4% annually, translating to mid- to high single-digit organic revenue growth that will be enhanced by targeted acquisitions. We expect improved pricing realizations and gradually increased margins as well.”

3. iShares Cybersecurity and Tech ETF (NYSE:IHAK)

5-Year Share Price Performance as of March 21: 87.69%

iShares Cybersecurity and Tech ETF (NYSE:IHAK) aims to replicate the performance of the NYSE FactSet Global Cyber Security Index, which consists of developed and emerging market companies in cybersecurity and technology sectors, including hardware, software, products, and services. As of March 20, 2024, the fund holds net assets valued at $840 million, with an expense ratio of 0.47% and a portfolio comprising 35 stocks. iShares Cybersecurity and Tech ETF (NYSE:IHAK) is one of the best cybersecurity ETFs to buy. 

Fortinet, Inc. (NASDAQ:FTNT), a global provider of cybersecurity and networking solutions, is one of the top holdings of the iShares Cybersecurity and Tech ETF (NYSE:IHAK). On February 6, Fortinet reported a Q4 non-GAAP EPS of $0.51 and a revenue of $1.42 billion, exceeding Wall Street estimates by $0.08 and $10 million, respectively. 

According to Insider Monkey’s fourth quarter database, 42 hedge funds were long Fortinet, Inc. (NASDAQ:FTNT), compared to 45 funds in the last quarter. Terry Smith’s Fundsmith LLP is the largest stakeholder of the company, with 7.3 million shares worth $429 million. 

Conestoga Capital Advisors Mid Cap Strategy stated the following regarding Fortinet, Inc. (NASDAQ:FTNT) in its fourth quarter 2023 investor letter:

“Fortinet, Inc. (NASDAQ:FTNT): FTNT is the worldwide market share leader in network security firewalls (by units). During the quarter, shares sold off as reported billings growth missed expectations for the second consecutive quarter, resulting in a further lowering of 2023/2024 guidance. Currently, FTNT continues to face weaker demand following three consecutive years of elevated growth. This is likely a near-term downcycle and management is opportunistically buying back shares at an accelerated pace.”

2. Global X Cybersecurity ETF (NASDAQ:BUG)

5-Year Share Price Performance as of March 21: 89.15%

Global X Cybersecurity ETF (NASDAQ:BUG) aims to invest in companies poised to benefit from the growing adoption of cybersecurity technology. These companies specialize in developing and managing security protocols to prevent intrusion and attacks on systems, networks, applications, computers, and mobile devices. Global X Cybersecurity ETF (NASDAQ:BUG) seeks to replicate the performance of the Indxx Cybersecurity Index before fees and expenses. As of March 20, 2024, the ETF holds net assets of $787.15 million with an expense ratio of 0.51% and a portfolio consisting of 24 stocks. It is one of the best cybersecurity ETFs to invest in. 

Gen Digital Inc. (NASDAQ:GEN) is one of the top holdings of Global X Cybersecurity ETF (NASDAQ:BUG). The company provides cyber safety solutions for consumers globally. Their offerings include security and performance products for PCs, Macs, and mobile devices, real-time protection against malware, viruses, and online threats, as well as identity theft protection solutions such as Norton and LifeLock. 

According to Insider Monkey’s fourth quarter database, 36 hedge funds were bullish on Gen Digital Inc. (NASDAQ:GEN), compared to 37 funds in the prior quarter. 

1. First Trust NASDAQ Cybersecurity ETF (NASDAQ:CIBR)

5-Year Share Price Performance as of March 21: 104.22%

First Trust NASDAQ Cybersecurity ETF (NASDAQ:CIBR) aims to replicate the performance of the Nasdaq CTA Cybersecurity Index before fees and expenses. This index tracks companies operating in the cybersecurity segment of the technology and industrials sectors, primarily engaged in developing, implementing, and managing security protocols for networks, computers, and mobile devices to safeguard data integrity and network operations. As of March 20, 2024, First Trust NASDAQ Cybersecurity ETF (NASDAQ:CIBR) holds net assets valued at $6.65 billion, with an expense ratio of 0.59% and a portfolio comprising 30 stocks. It is one of the best cybersecurity ETFs to monitor. 

Palo Alto Networks, Inc. (NASDAQ:PANW) is one of the top holdings of First Trust NASDAQ Cybersecurity ETF (NASDAQ:CIBR). Palo Alto Networks, Inc. (NASDAQ:PANW) is a global provider of cybersecurity solutions. Their offerings include firewall appliances, software, and security management solutions like Panorama. On February 20, Palo Alto Networks, Inc. (NASDAQ:PANW) announced financial results for its fiscal 2024 second quarter, ending January 31, 2024. The company reported a non-GAAP EPS of $1.46 and a revenue of $1.98 billion, outperforming Wall Street estimates by $0.16 and $10 million, respectively. 

According to Insider Monkey’s fourth quarter database, 77 hedge funds were bullish on Palo Alto Networks, Inc. (NASDAQ:PANW), compared to 79 funds in the last quarter. 

TimesSquare Capital U.S. Mid Cap Growth Strategy made the following comment about Palo Alto Networks, Inc. (NASDAQ:PANW) in its Q3 2023 investor letter:

“Across the Information Technology universe, we seek companies possessing differentiated capabilities, products, and services. Palo Alto Networks, Inc. (NASDAQ:PANW) supplies network and cloud-based security solutions to enterprises, service providers, and government entities. The latest quarter was mixed with the company falling shy versus the Street on billings, in line for revenues, and outpacing earnings. Palo Alto’s updated guidance was materially ahead of lowered Street expectations. Nevertheless, its shares pulled back by -8%.”

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