What?

We live in a digital world where almost everything is done (or can be done) online – from shopping, to banking, to working. Our world is being shaped by advances technology, as we are seeing from the rise in AI and in particular Generative AI. While this is very exciting, it also opens up new avenues for cyber threats and for malicious use of technology. Cyberattacks are growing in frequency, complexity and sophistication, and this means that defending against them needs to evolve in line. This means that cybersecurity is more critical than ever and will continue to be going forward.

For investors this isn’t just a risk, it’s a real potential investment opportunity. The rising demand for cybersecurity solutions makes this sector a clear theme and megatrend for years ahead. We think Cybersecurity is one of the most interesting, critical and enduring themes for the years ahead.

Why?

1. Cybercrime is projected to cost the world > $10 trillion by the end of 2025, threatening businesses and governments who will need to double-down on solutions to guard against it and the need for security will increase exponentially.
2. ‘Data is the new oil’ – companies globally are increasingly data driven and access to data is a prime reason for cyberattacks. Protecting this valuable asset is now essential.
3. Regulation – governments around the world are tightening regulations on data protection and privacy, and can impose fines on companies that fail in this regard. This again drives the need for companies to double-down on their cybersecurity.
4. The cybersecurity market is expanding dramatically and is projected to reach $350 billion by 2026, which is a compound annual growth rate of 14% since 2021 when the market was worth $180 bllion.
5. There is a significant spread of applications and use-cases for cybersecurity solutions, from network security, to cloud security, to endpoint protection, to identity management and threat intelligence. This means that the space is full of successful and innovative companies, such as Cisco Systems or Palo Alto Networks.
6. A defensive play – despite it being a high growth area, the interesting thing about Cybersecurity is that it’s also seen as a defensive opportunity too in the market. Regardless of economic environment, companies simply cannot afford to forgo security. This makes the Cybersecurity theme relatively stable compared to other high growth areas.
7. This is a market that is at the front and center of innovation, driven by new tech such as AI and blockchain.

How?

As usual with investing in themes, an ETF makes sense to give broad exposure to a range of Cybersecurity companies and the sector as a whole, capturing the wider opportunity and reducing single company risk. There are various established and popular Cybersecurity ETFs in the marketplace that are available to retail investors.

Not financial advice, posts for informational purposes only, always do your own research.