Why this leading ASX ETF is in the spotlight this week

There is an ever-growing list of ASX exchange-traded funds (ETFs) for investors to consider.

Following Russia’s invasion of neighbouring Ukraine, the Betashares Global Cybersecurity ETF (ASX: HACK) has certainly earned its place on that list.

If you’re not familiar, HACK provides ASX investors exposure to 41 leading global cyber security shares. Top holdings for the ASX ETF include Crowdstrike Holdings, Cloudflare Inc and Palo Alto Networks Inc.

There currently aren’t any Aussie listed cyber security firms among the ASX ETF’s holdings. That’s because the market caps of the Aussie shares are still too small to be included.

Why is HACK in the spotlight this week?

Russia is said to have one of the most advanced cyber armies in the world. To date, it’s restrained its cyber attacks largely to Ukrainian territory and assets.

But businesses and governments fear that may not remain the case.

Of particular concern is how businesses might recoup their losses, which can run into the many millions of dollars, from any potential cyber attacks.

Currently, businesses can take out cyber insurance to help cover the costs of a hacking attack.

But major state sponsored cyber attacks may be interpreted as an act of war. Meaning insurance companies may not cover the costs.

Indeed, as The Australian reports, insurance broker Marsh has sounded the alarm on the potential for Russia’s aggression against Ukraine to result in cyber attacks in other nations.

Should that happen, insurance rates would likely increase and some coverage may be exempted.

Kelly Butler, head of cyber at Marsh said, “We haven’t seen any claims hit the market as a result of the war. It will depend on what happens. If there are large losses, I would imagine premiums would increase.”

The Insurance Council of Australia (ICA) has also raised its concerns on the existing policies for cyber insurance.

In a recent report the ICA noted:

A major cyber event or a smaller series of connected successive attacks could render cyber insurance financially unviable. The impact of an accumulation event is of underlying concern to many insurers.

It’s urging the Australian government to come up with a national cybersecurity standard for cyber insurance issues and their clients in order to “evaluate their cyber maturity according to uniform and constantly evolving standards”.

That sounds like a fair recommendation.

In the meantime, and with HACK in mind, the best defence is, well, a good defence.

How has this ASX ETF been performing?

We’ll pick 24 February for our ‘as of performance date’ for HACK. That’s the day Russian troops officially invaded Ukraine.

Since 24 February the ASX ETF’s share price is up 13.9%.

By comparison, the All Ordinaries Index (ASX: XAO) has gained 6% in that same period.

The post Why this leading ASX ETF is in the spotlight this week appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended BETA CYBER ETF UNITS. The Motley Fool Australia owns and has recommended BETA CYBER ETF UNITS. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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