This article was produced on 20 August, 2024.

Key takeaways:

• The Betashares Global Cybersecurity ETF oversees nearly $1 billion in assets under management (AUM), with an average return of 17.02% per annum since its inception. As always past performance is not an indicator of future performance, and you should also undertake your own research.

  
  

• Debuting in September 2023, the Global X Cybersecurity ETF is far smaller than its Betashares peer, with net assets representing just $6.1 million, and a return of 13.83% since that time. As always past performance is not an indicator of future performance, and you should also undertake your own research.

  
  

• Both HACK and BUGG feature common names among their assets, albeit the former is more diversified than the latter on account of a greater number of unique holdings.

  
  

• Global X charges a management fee of 0.47% per annum for BUGG, compared with 0.67% per annum for Betashares HACK.

Cybersecurity was a key talking point last month as industry leader CrowdStrike was at the centre of the largest IT outage in history, with an estimated 8.5 million Windows computers disabled by a faulty software update.

Based on data from Mordor Intelligence, the global cybersecurity market is valued at US$207.8 billion in 2024, but this is forecast to reach US$376.6 billion by 2029.

How might investors gain exposure to this growing investment theme?

On the ASX, there are two ETFs offering pure-play exposure to the global cybersecurity industry, courtesy of the Betashares Global Cybersecurity ETF (ASX: HACK) and the Global X Cybersecurity ETF (ASX: BUGG).

Here is a look at how the two funds’ key features and attributes compare.

Fund Objective

According to Betashares, an investment in HACK aims to track the performance of the Nasdaq Consumer Technology Association Cybersecurity Index before fees and expenses.

This index is designed to provide exposure to “current and future industry leaders” in the global cybersecurity sector. The fund manager anticipates that “demand for cybersecurity services is expected to grow strongly for the foreseeable future,” with cybercrime increasing over recent years.

Meanwhile, the Global X Cybersecurity ETF seeks to invest in businesses that stand to benefit from increasing adoption of cybersecurity technology amid increasing reliance on digital ecosystems.

There is a focus on companies primarily engaged in the development and management of security protocols preventing intrusion and attacks on systems, networks, applications, computers and mobile devices. BUGG aims to deliver returns that correspond with the performance of the Indxx Cybersecurity Index before fees and expenses.

Fund Profiles and Holdings

The Betashares Global Cybersecurity ETF was admitted to the ASX on September 1, 2016. As at August 15, 2024, the fund’s net assets were $973.7 million. This total is slightly higher than at the end of July, when the fund boasted $960.1 million in net assets.

In comparison, the Global X Cybersecurity ETF is a recent addition to the ASX, debuting on September 13, 2023. Since then, the fund has remained small, with its assets under management (AUM) sitting at $5.1 million at the end of July, and since increasing to $6.1 million as at August 15, 2024.

Based on the most recent ASX Investment Products monthly update, dated July 2024, HACK was more popular than BUGG among investors and traders alike. Across all ASX trading (broker) participants, there were over 9,000 trades in HACK, whereas Global X BUGG recorded just 298.

HACK’s funds under management (FUM) grew by $6.6 million, which was attributable to $9.0 million in fund inflows. On the other hand, BUGG attracted $0.6 million in fund inflows, while FUM growth was $0.7 million.

Between the pair, HACK and BUGG feature several common holdings. As at August 15, 2024, the former holds shares in 29 different companies, whereas the latter owns 23 different holdings. The top 10 holdings in the Betashares Global Cybersecurity ETF account for 61.65% of the fund’s net assets, while the same cohort represents 58.35% of assets for the Global X Cybersecurity ETF, as at August 16, 2024.

^ = as at August 15, 2024; * = as at August 16, 2024 

Performance and Distributions

As at July 31, 2024, the Betashares Global Cybersecurity ETF delivered average returns of 22.50%, 8.89% per annum, and 15.22% per annum over the last one, three, and five years. Since inception, the fund’s average return has been 17.02% per annum. As always past performance is not an indicator of future performance, and you should also undertake your own research.

As the Global X Cybersecurity ETF is still a new fund, having not even traded for a full year on the ASX, there is limited performance data available to document its track record. Nonetheless, BUGG has returned 13.83% since starting out in September 2023. As always past performance is not an indicator of future performance, and you should also undertake your own research.

In the absence of said data, investors may wish to draw some inferences from the index the fund seeks to track, though this should not be used as an accurate gauge for the fund’s performance as ‘tracking errors’ are common among ETFs.

Based on this data, the Indxx Cybersecurity Index delivered returns of 21.5% and 5.2% per annum in the one and three-year periods ending July 31, 2024. Since inception, being October 2019, the index has returned 15.4% per annum.

In terms of distributions, both Betashares and Global X describe their respective funds as paying semi-annual distributions. As always, it must be reiterated that the amount and timing of distributions will vary from period to period, and there may even be periods where no distributions are made.

Fees

The Betashares Global Cybersecurity ETF charges a management cost of 0.67% per annum. The management cost for the Global X Cybersecurity ETF is lower, at 0.47% per annum.

Management fees are calculated in relation to the net asset value (NAV) of each fund daily, and prospective investors should note that other fees may apply.

Please refer to the relevant Product Disclosure Statements for up-to-date details on costs and expenses, which may be deducted from the fund’s assets as and when they are incurred.

Summary

Having traded on the ASX since 2016, the Betashares Global Cybersecurity ETF is far more established than the Global X Cybersecurity ETF, which only listed in September 2023. This is reflected in the two funds' net assets, whereby HACK oversees nearly $1 billion in assets, compared with just over $6 million for BUGG.

Nonetheless, Global X has positioned BUGG as a more ‘affordable’ ETF for pure-play exposure to the global cybersecurity industry, as evidenced by a management cost of 0.47% per annum, which is 20 basis points less than that of HACK. Although the top 10 holdings in HACK account for a slightly higher weight of all net assets, the fund offers greater diversification by way of a larger number of holdings.

Past performance is not an indicator of future performance, and it is important to always do your own research before making decisions to invest.

For more information, you can read about the Betashares Global Cybersecurity ETF here, and the Global X Cybersecurity ETF here. Before investing in any ETFs, you should consult the respective product’s Product Disclosure Statement, which will be available on the fund’s website.