2024 has well and truly begun and with it, investors can consider some of the big takeaways from last year. Megacap tech lifted the entire market in 2023, but it may be more helpful to think about some of the smaller tech slices and how they did. Some tech ETF strategies didn’t just see solid, respectable returns last year – some actually thrived. Such was the case for the WisdomTree Cybersecurity Fund (WCBR) which tracks the WisdomTree Team8 Cybersecurity index.
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WCBR has returned 71.2% over the last year, a remarkable tally which places it in the top ten tech equities ETFs in that time frame per VettaFi. It has done so, impressively, without significant exposure to the so-called “Magnificent Seven.” Indeed, as of this month, the tech ETF did not hold a single member of the seven. Instead, its focus on firms in cybersecurity has proven a shrewd investment.
For example, it weights CrowdStrike Holdings, Inc. (CRWD) as its largest holding. The firm has returned 181% over the last one year, a remarkable achievement for a large cap company. The firm specializes in “next-generation endpoint and cloud workload protection” per YCharts. CRWD is not the only firm in the tech ETF’s holdings that’s doing well, either. Zscaler (ZS), a software-as-a-service, or SaaS company, has returned 97.4%.
Tech ETF WCBR’s top holding, CRWD, has seen red hot returns as an investment per YCharts.
That overall performance for WCBR adds to its current appeal. Charging 45 basis points (bps), the strategy is set to hit its three-year ETF milestone on January 28th. So what is the outlook for cybersecurity investing for the next one year period?
One major factor to watch may be rate cuts. Yes, markets may be overestimating the number of cuts this year, but at least some rates seem very likely. That could really boost tech firms like the cybersecurity companies in WCBR. Taken together, a tech ETF like WCBR could be a solid option to watch as 2024 kicks into gear.
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