CIBR: Buy These 3 Cybersecurity ETFs to Protect Your Portfolio

The number of ETFs continues to grow with each passing day. You can now find an ETF for nearly every sector of the economy. In particular, cybersecurity ETFs are emerging as quite the popular group.

The number of cybersecurity stocks continues to increase as our society transitions toward the Internet of Things, or IoT, for short. Sorting through the entirety of internet stocks is not a wise use of your time. It might be better to invest in ETFs for widespread, properly diversified investing across the bulk of the sector.

Let’s take a look at three cybersecurity ETFs that have the potential to pop moving forward: First Trust NASDAQ Cybersecurity ETF (CIBR), ETFMG Prime Cyber Security ETF (HACK), and iShares Cybersecurity and Tech ETF (IHAK).

First Trust NASDAQ Cybersecurity ETF (CIBR)

CIBR is a specialized cybersecurity ETF centered on businesses that help safeguard activity on the internet. CIBR holdings are strictly limited to cybersecurity service providers classified as such by the Consumer Technology Association. This means the bulk of CIBR holdings are networking and software businesses. However, some of CIBR’s holdings are in other tech stocks, including those in the aerospace and defense space. CIBR holdings are weighted by liquidity. Furthermore, no more than 6% of CIBR funds are allotted to any specific company. The fund is rebalanced every quarter.

About 92% of CIBR stocks are in the United States. The remainder of the stocks are based in the United Kingdom, Japan, France, and Korea. Some of CIBR’s top holdings include Crowdstrike (CRWD), Zscaler (ZS), Cisco Systems (CSCO), Splunk (SPLK), Fortinet (FTNT), and Accenture (ACN).

CIBR has an overall POWR Rating grade of B and B grades in the Buy & Hold and Trade components. You can find out more about how CIBR fares in the remaining POWR Rating components by clicking here.

Out of the 107 Technology Equities ETFs, CIBR is ranked 26th. You can find other top ETFs in this category by clicking here.

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ETFMG Prime Cyber Security ETF (HACK)

HACK was the first-ever ETF to strictly focus on cybersecurity. The holdings in this fund are divided between cybersecurity services and cybersecurity hardware/software. HACK holdings are determined by market cap. The fund employs an equal weighting approach. HACK holdings are tilted toward small-caps. HACK is ranked 61st out of 107 Technology Equities ETFs.

Slightly more than 83% of HACK holdings are in the United States. Some of the fund’s top holdings include CSCO, FTNT, BlackBerry (BB), Palo Alto Networks (PANW), and FireEye (FEYE). However, no single fund holding is weighted more than 3.19%. HACK had a 2020 return of 41.51% and a 2019 return of 23.39%.

iShares Cybersecurity and Tech ETF (IHAK)

IHAK holdings include both large-cap and mid-cap stocks in the cybersecurity space. IHAK’s fund manager selects stocks primarily based on revenue. Companies that generate half or more of their revenue from cybersecurity or related offerings are considered. IHAK is reconstituted on a yearly basis and rebalanced semi-annually.

IHAK has B grades in the Buy & Hold and Trade grade components of the POWR Ratings. You can find out how IHAK fares in the Peer component by clicking here. This ETF is ranked 40th out of 107 Technology Equities ETFs.

About 86% of IHAK’s holdings are based in the United States. The rest of the fund’s holdings are located in Japan, Canada, Taiwan, the UK, Korea, and Malaysia. The top IHAK holding is FTNT, followed by CRWD, PANW, ZS, and Okta (OKTA).

No single stock constitutes more than 4.86% of the fund. The top 10 holdings comprise 40% of the fund. IHAK is down 8% so far year to date after gaining 51% last year.

Click here to check out our Cybersecurity Industry Report for 2021

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CIBR shares . Year-to-date, CIBR has declined -8.61%, versus a 2.61% rise in the benchmark S&P 500 index during the same period.

About the Author: Patrick Ryan

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...