Industry Updates

Cybersecurity ETFs spike following Russia invasion of Ukraine

Threat of cyber attacks has increased

Tom Eckett

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Cybersecurity exchange-traded funds (ETFs) increased last week after Russia’s invasion of Ukraine reinforced concerns about the potential for a rise in digital attacks.

Europe’s largest cybersecurity ETF, the $2.7bn L&G Cyber Security UCITS ETF (ISPY), jumped 4% last Friday alone, a day after Russia invaded Ukraine, while the WisdomTree Cybersecurity UCITS ETF (WCBR) and the Global X Cybersecurity UCITS ETF (BUG) both increased 4.6% over the past week, according to data from ETFLogic.

The Ukrainian government has been forced to bring in swathes of underground hackers in response to the “massive” cyber attacks which is suspected to come from Russia as part of its war against the country.

Other countries are now on red alert including the UK. Last month, the country’s National Cyber Security Centre (NCSC) called on businesses to “bolster their online defences” from potential Russian hackers.

The firm said in a statement: “While the NCSC is not aware of any current specifics threats to UK organisations in relation to events in and around Ukraine, there has been a historical pattern of cyber attacks on Ukraine with international consequences.”

In response to Russia’s attacks, hacking group Anonymous declared “cyber war” against the Russian government before revealing they hacked Russian TV channels and the Kremlin’s government website.

As a result, the cybersecurity industry looks set to benefit from the significant rise in attacks on government agencies and major businesses which need to increase their spending on digital defence.

Highlighting this, Alphabet has revealed plans to spend over $10bn to improve cybersecurity in the next five years while the overall industry is forecasted to hit $352bn in 2026, up from $156bn in 2020, according to Mordor Intelligence.

Mike Wills, director of strategy and policy at cyber and data security firm CSS Assure, said businesses “should make themselves as hard to hack as possible at all times – but more so than ever”.

“From a strategic perspective, there is a significant risk that Russia may seek to create instability within western countries and, specifically, the UK as a means to distract focus and attention away from the situation in Ukraine and onto closer, acute problems at home.”

The cheapest cybersecurity ETF in Europe is the iShares Digital Security UCITS ETF (LOCK) which charges 0.40% and has gathered $1.6bn assets under management (AUM) since launch in September 2018.

Other cybersecurity ETFs include the First Trust Nasdaq Cybersecurity UCITS ETF (FCBR) and the Rize Cybersecurity and Data Privacy UCITS ETF (CYBR) which come with fees of 0.60% and 0.45%, respectively.

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