Betashares senior investment strategist Cameron Gleeson says increasingly frequent cyber attacks help make a compelling investment case for the Betashares Global Cybersecurity ETF (ASX: HACK).
In a recent blog, Gleeson described cybersecurity as a "unique, defensive play" in the technology arena.
The investment strategist said cybersecurity had become a critical need in today's society as governments, companies and individuals increasingly relied on technology and data.
Globally, there has been increasing frequency and sophistication of cyber attacks in recent years with governments and corporates spending large amounts on cybersecurity solutions to prevent sensitive data breaches from occurring.
With the rise of artificial intelligence and its associated demand for large amounts of training data, the need for robust cybersecurity solutions has never been more important.
This presents a compelling investment case that Australian investors can access through the Betashares HACK Global Cybersecurity ETF.
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The cybersecurity threat (and opportunity for investors)
Cybersecurity has become a hot-button issue in Australia following data breaches at large organisations, including Optus, Ticketmaster, and Medibank Private Ltd (ASX: MPL).
There are more opportunities for cyber attacks as the world becomes more connected via networked devices, the move to cloud computing, and a huge new remote workforce operating from home.
Governments and companies around the world are scrambling to update their cybersecurity to deal with the threat.
This means increased demand for cybersecurity services from a range of companies around the world.
A research report by Sanjana Prabhakar from Nasdaq Index Research & Development revealed the total addressable market (TAM) for cybersecurity was worth $1.5 trillion to $2 trillion globally, based on McKinsey data.
At best, only 10% of that TAM has been penetrated today "with a very long runway for growth".
Prabhakar said:
As per Statista, during the period 2024-2028, cybersecurity revenue is expected to grow at an annual rate of 10.6%, resulting in a total market size of $273.6 billion by 2028.
Australians limiting online activity due to cybersecurity risks
A new study on the digital lives of Australians published by auDA found that 64% of consumers and 55% of small businesses avoid online activity due to concerns about data security.
More than 40% of consumers and small businesses would like to strengthen their online security but don't know how.
Only 13% of consumers and 24% of small businesses are confident in their knowledge and skills relating to cybersecurity.
Australians have high expectations of companies that hold personal information about them, too. About 83% of consumers and 79% of small businesses believe companies should do more to protect their data.
auDA CEO Rosemary Sinclair AM said:
auDA's research continues to identify there is a clear need for trustworthy, accessible cyber security training and resources to help Australians feel confident online.
Much like nation-wide road safety campaigns have helped save lives, now is the time for a coordinated, long-term, nation-wide effort to communicate cyber security basics to bolster the security knowledge and practices of all Australians and small businesses.
Concerns about data safety can also affect businesses in many ways, including their marketing power.
A Power Retail survey found nearly 60% of Australians were unwilling to sign up for loyalty programs because they did not trust in companies' handling of their personal information.
Let's learn about the ASX ETF HACK
The HACK ASX ETF seeks to track the performance of the Nasdaq CTA Cybersecurity Index (before fees and expenses).
The ETF has net assets worth $921 million. More than 70% of its holdings are United States companies.
Its biggest stock holdings are Broadcom Inc (8.7%), Crowdstrike Holdings Inc (7.5%), Palo Alto Networks Inc (6.4%), and Cisco Systems Inc (5.9%).
The HACK ETF is trading flat on the ASX today at $11.33 per unit.
Over the past five years, the ASX ETF has returned an average 16.09% per annum, assuming the reinvestment of distributions. The ETF's unit price is up 47.53% over the past five years.
Betashares charges a management fee of 0.67% for this ASX ETF.
