Opinions
Larry Berman CFA, CMT, CTA
Evolve Cyber Security Index ETF
CYBR-T
BUY
Mar 21, 2022
Stock price when the opinion was issued
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Canadian cybersecurity ETF choices include CYBR and HBUG, which tracks BUG. Different levels of volatility. Equal weight ones will have higher highs and lower lows. Market-cap weighted ones will ride the trend more smoothly. See which aligns with your risk profile, and be careful of position size.
CYBR has assets under management of $174.74M, management fee at 0.4%, and year-to-date return of 43.3%. CYBR is also hedged to CAD so if CAD rises vs USD, an investor would be better off with the hedge. CYBR does offer an unhedged version and we typically prefer unhedged ETFs due to the difficulty of predicting currency changes and it brings a bit extra diversification. Overall though, CYBR has performed very well this year and reflects the strength of cyber security industry this year. Management fee is OK and pays a distribution yield of 0.27%. We think it is a decent exposure to the industry.
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Not a big fan of ETFs, especially with cybersecurity. With the ETF, you have to very carefully look at the weightings within. Many will have overweight positions.
Cybersecurity ecosystem is so robust that you can buy the underlying stocks, rather than have someone else, for a fee, build positions for you. On top of that, you can figure out yourself entry points and price targets. Names like CRWD, FTNT, or PANW. See his Top Picks.
If want sector theme in cyber security - can be a good option. Depends on investor portfolio weighting. Likes the ETF and the overall direction of the cyber security sector (becoming more and more important). Best option for most people who don't have the time to research specific companies.