Hacks, data breaches and other cyber-enabled crimes have increased in frequency, fueling the need to take steeps to protect oneself when using the Internet, according to the FBI. As a result, the cybersecurity investment theme has also taken on increased prominence.
That theme is accessible via some exchange traded fund dedicated to cybersecurity and the related stocks while other diversified technology funds also offer cybersecurity exposure, including the iShares North American Tech ETF (NYSEArca: IGN).
“We view cyber security as a pressing issue, as it has become a flash point where countries’ economic and national security interests can overlap,” said BlackRock in a recent note. “This is playing out in real time in the U.S.-China trade negotiation, with market implications across the technology supply chain in particular.”
According to a recent SailPoint survey of 400 IT leaders conducted during Cybersecurity Awareness Month, nearly two in three professionals indicated that they are extremely concerned about their personal identity being stolen. Half of the participants even admitted that they would participate in types of risky behavior that would increase the threat of leaked information and a potential breach.
Inside IGN ETF
IGN tracks the S&P North American Technology-Multimedia Networking Index. Home to just 20 stocks, the ETF is highly focused among tech funds, but it does offer ample cybersecurity exposure. Cisco Systems Inc. (NASDAQ: CSCO) accounts for nearly 10% of the fund’s weight and that company has significant cybersecurity exposure and another cybersecurity name, F5 Networks Inc. (NASDAQ: FFIV), is 8% of IGN’s weight.
Several other IGN components have significant cybersecurity exposure as well, positioning the fund as alternative for investors that want exposure to this theme without having to embrace a dedicated cybersecurity ETF.
“We are still positive on makers of semiconductor products related to 5G development over the long term, but believe investors need to pay more attention to potential impacts of geopolitical tensions on the supply chain,” according to BlackRock. “And more broadly, we see potential for such tensions to drive a gradual decoupling of the U.S. and Chinese technology sectors – a reason why we believe there is a case for owning tech companies in both.”
For more information on the tech sector, visit our technology category.
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.