Investors remain enthusiastic about thematic exchange traded funds, and cybersecurity funds are among their favored destinations this year.
That includes the First Trust Nasdaq Cybersecurity ETF (CIBR). CIBR, which tracks the Nasdaq CTA Cybersecurity Index, is the oldest and largest cybersecurity ETF, and it’s benefiting from investors’ willingness to engage with thematic funds.
“Thematic exchange-traded funds — which let people invest in stocks related to a trend instead of an index — have had a difficult year, after some exceptional performance in 2020. Despite that, Goldman Sachs says they continue to prove popular and names the ones with the biggest inflows this year,” reports Zavier Ong for CNBC.
Goldman Sachs says CIBR’s year-to-date inflows reside around $1.3 billion — a total surpassed by five other thematic ETFs. That quintet includes funds that are sensible in terms of outpacing CIBR in year-to-date asset gathering. Members of the group include an infrastructure ETF, a lithium ETF, and an environmental, social, and governance (ESG) fund.
However, CIBR is benefiting from relevant headlines, too. Namely, a spate of cyber attacks, such as the Colonial Pipeline hack earlier this year.
Noting that thematic ETFs could be a “maturing category,” Goldman Sachs analyst Jessica Graham says, “the category remains one worth watching: flows have been stable despite a more volatile performance backdrop, liquidity has improved and product launch cadence remains.”
Confirming that there’s ample enthusiasm for cybersecurity ETFs, the Global X Cybersecurity ETF (BUG) is also on the list of top asset-gathering thematic ETFs this year. That fund, one of four Global X funds on the list, has 2021 inflows of $800 million. That’s a massive percentage of its $1.11 billion in assets under management, which itself is an impressive tally considering that BUG is just 26 months old.
BUGG follows the Indxx Cybersecurity Index, which is a basket of companies that could benefit from increased adoption of cybersecurity technology, including companies whose principal business involves developing and managing security protocols to prevent intrusion and attacks on systems, networks, applications, computers, and mobile devices.
BUG and CIBR are up an average of 9.5% this year.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.