Global X Cybersecurity ETF

The Global X Cybersecurity ETF (ASX: BUGG), seeks to invest in companies that stand to benefit from the increased adoption of cybersecurity technology, particularly those whose principal business is in the development and management of security protocols preventing intrusion and attacks on systems, networks, applications, computers, and mobile devices.

The Global X Cybersecurity ETF, often referred to as BUGG, seeks to invest in companies that stand to benefit from the increased adoption of cybersecurity technology, particularly those whose principal business is in the development and management of security protocols preventing intrusion and attacks to systems, networks, applications, computers, and mobile devices. BUGG aims to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Indxx Cybersecurity Index. 

• Cybercrime and hacking are a US$300 billion industry.² 
• Widespread cybercrime is the fifth most pressing concern for the global economy in 2023, only behind the energy crisis, cost of living, inflation, and food supply, according to the World Economic Forum.³
• BUGG has minimal overlap with the S&P 500 and Nasdaq 100, with only five companies appearing across all three indices, as of 30 June 2023. 

² INSUREtrust. (2023). Cybersecurity: Hacking Has Become a $300 Billion Dollar Industry. Available here: https://insuretrust.com/2019/01/14/cybersecurity-hacking-has-become-a-300-billion-dollar-industry/

³ World Economic Forum. (2023). The Global Risks Report 2023. Available here: https://www3.weforum.org/docs/WEF_Global_Risks_Report_2023.pdf

Cybersecurity companies are specialised businesses with a goal to protect their clients from cybercrimes, data breaches and malicious attacks. They design solutions to safeguard organisations’ hardware, software and data.

Cybersecurity has been evolving alongside the internet for decades. Its adoption has not been as widespread. So, while we are more connected than ever before, these connections are vulnerable to being exploited by cyber threats. For instance, during the Covid-19 pandemic, when lockdowns forced more businesses online, there was a notable spike in the number of reported cybercrimes. This is a worldwide phenomenon, but in Australia, large-scale cyberattacks are becoming more prolific. In 2023 it was recorded that there are 2,200 cyber attacks per day, with a cyber attack happening every 39 seconds on average. In the US, a data breach costs an average of $9.44M^4. 

⁴ (Astra, 2024) https://www.getastra.com/blog/security-audit/cyber-security-statistics/#:~:text=Cybersecurity%20statistics%20indicate%20that%20there,cost%20%248%20 trillion%20by%202023.

There is a growing incentive for individuals, organisations and governments to invest in cybersecurity as the amount, severity and cost of cyberattacks are predicted to increase. A survey by PwC suggests in 2024, 79% of organizations will be increasing their cybersecurity budgets⁵. Similarly, government intervention and regulation are another key factor driving more capital towards cybersecurity, with nations such as the US, Japan and Israel creating specific policies to manage cyber threats. Looking ahead, there are several structural megatrends in disruptive technologies that stand to benefit from the cybersecurity industry, including the cloud, artificial intelligence, and digital assets. Ultimately, this points to significant upside potential for the broad cybersecurity industry and revenue growth.

⁵ (Tech Target, 2023) https://www.techtarget.com/searchsecurity/feature/Cybersecurity-budget-trends

¹ (Mordor Intelligence, 2024) https://www.mordorintelligence.com/industry-reports/cyber-security-market

• As a satellite exposure to gain exposure to growing demand and investment in the cybersecurity industry. 
• As a thematic tilt towards megatrends, including digitalisation and online connectivity. 
• To diversify exposure away from major technology stocks in the S&P 500 and Nasdaq 100.

The Indxx Cybersecurity Index is designed to provide exposure to companies which generate at least 50% of revenue from cybersecurity activities, including but not limited to the development and management of security protocols preventing intrusion and attacks to systems, networks, applications, computers, and mobile devices. There can be a maximum of 40 companies in the index, each capped at a 6% weight and a minimum of 0.3%. Companies are weighted according to their market capitalisation (minimum of US$200 million). The index is rebalanced, and distributions are paid semi-annually. 

BUGG invests primarily in companies focused on the cybersecurity industry and, as such, is particularly sensitive to risks affecting those types of companies. Cybersecurity companies may have limited product lines, markets, financial resources, or personnel. They typically face intense competition and potentially rapid product obsolescence, can be adversely impacted by government regulations and actions, and may be subject to additional regulatory oversight regarding privacy concerns and cybersecurity risk. • Market or economic factors impacting cybersecurity companies and companies that rely heavily on technology advances could influence the value of BUGG’s investments. • Concentration risk to a particular stock could adversely impact the Net Asset Value of the Fund, in the case of decline in the value of any stock to which the Index, and therefore the Fund, is exposed.

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The issuer of units in Global X Cybersecurity ETF (BUGG) ARSN: 661 603 809 is the responsible entity of the Fund, being Global X Management (AUS) Limited (AFSL 466778) ("Global X"). The product disclosure statement (PDS) for the Fund contains all of the details of the offer of units in the Fund. Copies of the PDS are available from Global X Management (AUS) Limited or at www.globalxetfs.com.au. In respect of each retail product, Global X has prepared a target market determination (TMD) which describes the type of customers who the relevant retail product is likely to be appropriate for. The TMD also specifies distribution conditions and restrictions that will help ensure the relevant product is likely to reach customers in the target market. Each TMD is available at www.globalxetfs.com.au. The information provided in this document is general in nature only and does not take into account your personal objectives, financial situations or needs. Before acting on any information in this document, you should consider the appropriateness of the information having regard to your objectives, financial situation or needs and consider seeking independent financial, legal, tax and other relevant advice having regard to your particular circumstances. Any investment decision should only be made after obtaining and considering the relevant PDS and TMD. Investments in any product issued by Global X are subject to investment risk, including possible delays in repayment and loss of income and principal invested. None of Global X, the group of companies which Mirae Asset Global Investments Co., Ltd is the parent, or their respective directors, employees or agents guarantees the performance of any products issued by Global X or the repayment of capital or any particular rate of return therefrom. The value or return of an investment will fluctuate and an investor may lose some or all of their investment. Past performance is not a reliable indicator of future performance.

Information current as at 29 February 2024.