Cybersecurity remains a growing threat for businesses, and the U.S. Securities and Exchange Commission has taken note. With increased attention from major regulators, the space looks to continue thriving as cybersecurity needs only grow for companies and could be an area of opportunity for investors.
The commenting period recently closed on proposed amendments by the SEC around increased reporting requirements for public companies regarding cybersecurity threats and incidents, Forbes reported. The aim is to provide investors with a clearer view of the risk companies face within the cybersecurity arena as operations all become increasingly digital and more complex.
The amendments seek to force companies to disclose cybersecurity breaches and the costs, and while there was pushback in the commenting period, a clear ruling will likely come in the fall.
Cybersecurity has become a top priority for many companies in the last two years as the pandemic has caused a shift to a work-from-home model for some workers, creating greater opportunities for hacking and cybersecurity threats, which have increased astronomically. War in Ukraine has only highlighted the important role that security within the digital landscape has, and for advisors and investors looking to allocate to an industry that is continuing to grow rapidly, the WisdomTree Cybersecurity Fund (WCBR) offers a great opportunity.
WCBR seeks to track the WisdomTree Team8 Cybersecurity Index, which invests globally in companies whose main revenue is derived from cybersecurity and security-oriented technology that prevents attacks and intrusion into systems, networks, computers, applications, and mobile devices. Companies included must derive at least half of their revenues from cybersecurity, have revenue growth of at least 7% over the trailing three years for new additions to the index, or 5% for current index constitutions, and meet market cap and average daily trading volume requirements.
The index also utilizes exclusionary filters to screen out companies based on ESG criteria that violate UN and Global Standards Screening guidelines, are involved in controversial weapons (biological, chemical, cluster, nuclear, or white phosphorous weapons, and anti-personnel mines), have significant involvement in tobacco or thermal coal activity, or violate other ESG standards of the index.
The current country allocation includes the U.S. at 81.44% weight, Israel at 7.37%, the United Kingdom at 3.76%, Japan at 3.60%, South Korea at 2.82%, and Canada at 1.02%.
WCBR carries an expense ratio of 0.45%.
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