HACK Versus CIBR: Choosing a Cybersecurity ETF

Do you have cybersecurity on your mind? The HACK and CIBR ETFs both offer diverse exposure. How are the ETFs different?

Rachel Curry - Author

May 26 2021, Published 12:47 p.m. ET

Ransomware negotiation is a specialized field. It requires the skills to bring hackers' bids down, while buying time to try to remove the hacker's grip on a company's technology. After the Colonial Pipeline paid $4.4 million to Russian hackers that left the pipeline largely shut down for more than a week, the negotiator's role in the cybersecurity space is apparent. ETFs like HACK and CIBR are also important.

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Which of these top cybersecurity ETFs is better for investors? How are HACK and CIBR different?

Comparing HACK and CIBR based on performance

Since the Colonial Pipeline reopened, the First Trust NASDAQ Cybersecurity ETF (CIBR) has risen 6.68 percent. During the same period, the ETFMG Prime Cyber Security ETF (HACK) has risen 6.62 percent.

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The performance similarities continue over the short and long term for the two funds. For example, CIBR is up 2.8 percent YTD, while HACK is up 3.59 percent. Fast forward to a five-year perspective and CIBR is at 159.8 percent, while HACK is up 143.6 percent.

As for share price, First Trust is selling its CIBR shares at a market value of $44.80, while ETFMG is selling HACK shares for $58.57. The two funds have identical expense ratios of 0.6 percent.

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CIBR cybersecurity ETF brings more net assets

CIBR holds $3.67 billion in net assets, which is a full $1.59 billion more than HACK. A larger pool can be beneficial for ETF holders, much in the same way a hedge fund works. The trading volume for CIBR is also superior with an average volume of more than 508,000 (HACK's average is about 184,000).

HACK ETF has a longer history and focuses more on software

HACK has about a year over CIBR, which is beneficial in the short term but loses value as the funds get older. HACK also focuses more on software and IT, which could be helpful for investors specifically seeking exposure in those areas.

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Choosing between HACK and CIBR

Because of the size and diversity of CIBR, the ETF performs better when the overall cybersecurity market is struggling. However, a thriving cybersecurity market tends to favor HACK.

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Even though HACK has a higher price point, the fund is in a solid position over the long term. After the pipeline attack, cybersecurity regulations face heightened scrutiny. The Biden administration is already preparing to release new mandates on cybersecurity. This is bound to frustrate private business owners who aren't keen on additional governmental involvement. However, it also highlights the privacy-oriented world we're moving toward.

CIBR and HACK are both in solid positions to provide solutions for and profit off of this shift. Choosing a cybersecurity ETF depends on your risk tolerance in adverse market conditions as well as your preferred stock price point (although apps offering fractional investing tend to make this a moot point).


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