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...more and more data, systems and people are connecting digitally...
Yet governments, companies and individuals are increasingly concerned about the implications of cyber crime:
Data security
Financial impact
...and the costs are already mounting rapidly.
15%
$10.5 trillion
The percentage that global cyber crime costs are expected to grow by per year from 2020 to 2025
The annual cost that cyber crime is estimated to reach by 2025
Sources: 1. 2022 Cybersecurity Almanac, Cybersecurity Ventures;
The following are just some of the cyber security challenges we face today:
Fortunately, the cyber security industry is responding. This is reflected in its expanding revenues:
The L&G Cyber Security UCITS ETF is a simple, liquid and cost-effective way to access this high-growth megatrend.
Broad global exposure to a unique basket of cyber security companies
Key features
Diversification* across countries, sectors and market capitalisation
Potential for reduced volatility versus investing in individual cyber security stocks
Quarterly rebalancing to respond to new companies and trends
Supported by a team of cyber security experts
UCITS compliant
...while aiming to replicate the performance of the ISE Cyber Security® UCITS Index...
The ISE Cyber Security® UCITS Index is equally weighted, allowing the Index to capture growth trends in both established and emerging companies.
The eligibility of companies is determined by ISE Cyber Security Industry Classification, with liquidity thresholds of a minimum $100m market cap and three months Average Daily Volume (ADV) of $1m to qualify.
Companies listed on the Future World Protection List (FWPL) are excluded from the index. This list is produced by Legal & General Investment Management and consists of perennial violators of the UN Global Compact Principles, pure coal companies and controversial weapons manufacturers.
Source: Bloomberg
*Source: Bloomberg; all in USD; as at 30 June 2022. Performance is shown net of fees and charges. Past performance is not a guide to the future.
All returns, correlations and volatilities are based on data in USD. Dates are from 30 June 2017 to 30 June 2022 unless otherwise stated. Sharpe ratios are based on 5 year annualised returns, 5 year annualised volatility and a risk free rate of 1.16% (average of US 5y rates over 1 year). The index was launched on 31 August 2015. The value of an investment and any income taken from it is not guaranteed and can go down as well as up; you may not get back the amount you originally invested.
Historical performance. Rebased 100 = March 2017
Fund specific risks
As the Index includes small and medium-sized publicly traded companies, the Fund is subject to the risk that such companies may be more vulnerable to adverse business or economic events and greater and more unpredictable price changes than larger companies or the stock market as a whole. The Fund invests in technology companies whose products may face rapid obsolescence due to technological developments and frequent new product introduction. Such companies may face unpredictable changes in growth rates, competition for the services of qualified personnel and intense domestic and international competition, including competition from foreign competitors with lower production costs. Such companies are heavily dependent on patent and intellectual property rights. The loss or impairment of these rights may adversely affect the profitability of these companies. Additionally, companies in the cyber security field may be the target of cyber attacks themselves, which, if successful, could significantly or permanently damage a company’s reputation, financial condition and ability to conduct business in the future. Third party service providers (such as counterparties entering into FDIs with the Fund or the Company’s depositary) may go bankrupt and fail to pay money due to the Fund or return property belonging to the Fund. If the Index provider stops calculating the Index or if the Fund’s license to track the Index is terminated, the Fund may have to be closed. It may not always be possible to buy and sell Shares on a stock exchange or at prices closely reflecting the NAV. There is no capital guarantee or protection on the value of the Fund. Investors can lose all the capital invested in the Fund. Please refer to the “Risk Factors” section of the Company’s Prospectus and the Fund Supplement.
Key risks
Past performance is not a guide to the future. The value of an investment and any income taken from it is not guaranteed and can go down as well as up, you may not get back the amount you originally invested.
...and as a result, we believe cyber security has an indispensable role to play in growth portfolios.
Assumptions, opinions and estimates are provided for illustrative purposes only. There is no guarantee that any forecasts made will come to pass.
Reputational damage
Enter Europe’s original cyber security ETF
Learn more about the fund
Projected global spending on cyber security
$1.75 trillion cumulatively 2021 to 2025
Source: Cybersecurity Ventures
$262.4bn
Spending by year $ in billions of dollars
$301.8bn
$347bn
$399bn
$458.9bn
2. Cybersecurity Ventures
Research company Cybersecurity Ventures' estimated total cost of cyber crime in 2021. To put that into context, if cyber crime were a country it would be the world’s third-largest economy after the US and China
$6 trillion
The digital revolution is only just beginning...
...and robotics, automation and AI are set to change the world once again.
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Viruses & malware
Data encryption
Email encryption
Cloud
Endpoint security
Biometrics & ID
Web filtering
Predictive analysis
The ETF offers exposure to leading cyber security companies across the spectrum...
2021
2022
2023
2024
2025
...which itself has consistently outperformed the MSCI World Index.
Performance (%) in USD
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The invasion of Ukraine may have increased the likelihood of cyber attacks from state actors and cyber criminals.
Shortly before the invasion, a slew of Ukrainian government websites were hit by what appeared to be a ransomware attack demanding payment in bitcoin.
1. The fog of war
Infrastructure
Supply chain
Source: Microsoft Threat Intelligence Center
As companies become increasingly aware of the cyber security threat, attackers are focusing on the systems that sit between vendors and end customers.
One example of this is the SolarWinds hack. In December 2020, an attack on SolarWinds’s Orion network management system (NMS) led to the theft of data held by more than 30,000 public and private organisations, including NATO, the US and UK governments, the European Parliament and Microsoft.
Infrastructure
Conflict
Source: Adapted from Enisa Threat Landscape for Supply Chain Attacks, Enisa
2. Supply chain attacks
The security of critical infrastructure has long been a concern, but the issue rose in prominence following the ransomware attack on the Colonial Pipeline, the largest petroleum pipeline in the US.
In May 2021, the attackers demanded $4.4m in bitcoin to decrypt the system. Yet although this ransom was paid almost immediately, bringing the pipeline back online proved a slow process, leading to fuel shortages and a price spike.
This was by no means a one-off. In 2021, the US Cybersecurity & Infrastructure Security Agency revealed that as far back as 2011-2013, some 23 US oil and gas pipelines were subject to a coordinated spear phishing and intrusion campaign.
Supply chain
Conflict
3. Attacks against critical infrastructure
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*It should be noted that diversification is no guarantee against a loss in a declining market.
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Important information
The invasion of Ukraine may have increased the likelihood of cyber attacks from state actors and cyber criminals.
Shortly before the invasion, a slew of Ukrainian government websites were hit by what appeared to be a ransomware attack demanding payment in bitcoin.
1. The fog of war
Infrastructure
Supply chain
3
2
Source: Microsoft Threat Intelligence Center
As companies become increasingly aware of the cyber security threat, attackers are focusing on the systems that sit between vendors and end customers.
One example of this is the SolarWinds hack. In December 2020, an attack on SolarWinds’s Orion network management system (NMS) led to the theft of data held by more than 30,000 public and private organisations, including NATO, the US and UK governments, the European Parliament and Microsoft.
3
1
Infrastructure
Conflict
Source: Adapted from Enisa Threat Landscape for Supply Chain Attacks, Enisa
2. Supply chain attacks
The security of critical infrastructure has long been a concern, but the issue rose in prominence following the ransomware attack on the Colonial Pipeline, the largest petroleum pipeline in the US.
In May 2021, the attackers demanded $4.4m in bitcoin to decrypt the system. Yet although this ransom was paid almost immediately, bringing the pipeline back online proved a slow process, leading to fuel shortages and a price spike.
This was by no means a one-off. In 2021, the US Cybersecurity & Infrastructure Security Agency revealed that as far back as 2011-2013, some 23 US oil and gas pipelines were subject to a coordinated spear phishing and intrusion campaign.
1
2
Supply chain
Conflict
3. Attacks against critical infrastructure
2
1
Supply chain
Conflict
2
Supply chain
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3
Infrastructure
Cyber security: An opportunity for investors
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