Cybersecurity ETF: Bearish Price Trends Ahead Of CrowdStrike Earnings Report

 | Jun 01, 2022 06:38AM ET

This article was written exclusively for Investing.com

  • Cybersecurity is a hot topic among firms across the sector spectrum. It’s also a popular thematic investing play.
  • The HACK ETF offers investors exposure to the space at a reasonable cost, but its valuation suggests the industry is still richly priced.
  • The technical chart suggests risks are to the downside, but there is a favorable entry point investors can use to dip their toes into.

Cybersecurity stocks are constantly talked about as a key thematic play. The major ETF tracking the space is the ETFMG Prime Cyber Security ETF (NYSE:HACK).

According to ETFMG, the HACK fund allocates to a portfolio of companies providing cyber security solutions. That includes firms in the hardware, software, and services niches. The fund features an expense ratio of 0.60% and rebalances its holdings each quarter.

Dividend investors won’t seek out HACK as it yields just 0.27% as of May 28, 2022.

h2 International Spin on Cybersecurity–But It Does Not Come Cheaply/h2

HACK is 81% comprised of US stocks and has 68 holdings. Which means you also get some foreign exposure.

So far this year, the fund is down more than 20%, about on par with other globally diversified technology funds. Moreover, the current average price-to-earnings ratio of the fund is high at 28.3, according to The Wall Street Journal.

On valuation, I think the industry still has room to see multiple contractions given how the air has been let out of the tech trade since November last year, particularly among small- and mid-caps.

Year-to-Date ETF Performance Heat Map: HACK ETF Down More Than 20%