The ETFMG Prime Cyber Security ETF (HACK) is likely to continue enjoying increased investor interest as long as cyber defense remains an integral part of a business's security measures—and it appears as though it will. According to a report by Global Market Insights, the cybersecurity market has an expected compound annual growth rate of 15% through 2032 and is forecast to reach a market size of about $900 billion.
Learn more about the HACK ETF and the see what's in store for the cyber defense securities market.
- The HACK ETF invests in companies that create cybersecurity solutions.
- Spending on cybersecurity is expected to grow rapidly, with a CAGR forecasted to be as much as 15% through 2032.
- Cyber attacks on the U.S. government and businesses continue to make headlines, fueling growth expectations as the world migrates more to a digital landscape.
HACK ETF Overview
The HACK ETF, sponsored by ETF Managers Group LLC, or ETFMG, invests in companies that offer hardware, software, and services in the cybersecurity field. It is designed to track the performance of the Prime Cyber Defense Index (PCYBER), which includes "companies providing cyber security solutions that include hardware, software and services."
EFTMG says that HACK, launched in November 2014, is the first and largest ETF focused on the cybersecurity industry.
The top holdings of the HACK ETF are, as of Nov. 19, 2022:
- Leidos Holdings, Inc. (LDOS)
- Fortinet Inc. (FTNT)
- Verisign, Inc. (VRSN)
- Cisco Systems Inc. (CSCO)
- Booz Allen Hamilton (BAH)
- BAE Systems (BA/LN)
- Akamai Technologies Inc. (AKAM)
- Gen Digital, Inc. (GEN)
- Check Point Software Tech, LTD. (CHKP)
- Palo Alto Networks Inc. (PANW)
Following a significant decline in the stock market in 2022, the HACK ETF was down in November 2022 by -23.45% YTD, but it trailed its benchmark, the Prime Cyber Defense Index, which was down -26.01% YTD.
HACK closed at $45.23 on Nov. 18, 2022, after a tumultuous month of trading. One year before, HACK closed at $64.85, but this downturn is expected as investors weather a bull market and waiver under forecasts of a recession. However, HACK endured a mini-recession and global pandemic, returning 95.25% since its inception, demonstrating its resilience in volatile markets.
Cyber Security Industry Outlook
According to research and consulting giant Gartner, there are three major factors fueling the cybersecurity industry's growth into 2023. Many businesses are transitioning to zero-trust network access, shifting to cloud-based delivery models, and employees are being allowed to work remotely or in positions that are a mix of remote and in-office work.
Zero-trust network access is a solution that allows remote access to an organization's services, data, and applications. Verification is conducted using several methods per session, with a user's identity, context of use, and policy adherence validated per each request.
More digital solutions means more demand for security and thus, more industry growth.
Gartner forecasts spending on cybersecurity products and services to grow 11.3% in 2023 and higher into 2024. Other analysts expect an increase in market size by more than $266 billion by 2027 and over $470 billion by 2030.
With the amount of spending in the industry expected to increase alongside the demand for cybersecurity solutions, the market is likely to begin reflecting the increase for several years.
What Companies Are in the HACK ETF?
There are several companies in the HACK ETF, including Leidos Holdings, Inc. (LDOS), Fortinet Inc. (FTNT), Verisign, Inc. (VRSN), Cisco Systems Inc. (CSCO), and Booz Allen Hamilton (BAH).
What Is Better, CIBR or HACK?
Both are cybersecurity ETFs offered by different brokers. CIBR seeks to track the Nasdaq CTA cybersecurity index, while HACK aims to mirror the Prime Cyber Defense Index. Both indexes have many of the same holdings and perform similarly, so one isn't necessarily better than the other.
Does Hack ETF Pay a Dividend?
The Hack ETF does pay dividends, the last three of which were $0.02, $0.025, and $0.017.