Investors have several options when considering cybersecurity ETFs to purchase. In this video clip from "Ask Us Anything" on Motley Fool Live, recorded on May 5, Fool.com contributors Jose Najarro, Connor Allen, and Nick Rossolillo discuss two of their most attractive stocks in the ETF market.
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Jose Najarro: The ETF mentioned was BUG. It's an ETF from Global X (BUG 1.20%). I was taking a quick look at it, and it doesn't look horrible. I think if I was to go through the ETF approach, this would be one that would definitely make the list. Total expense ratio's about 0.5%. Normally you'd kind of see ETFs that are market-specific have a lot higher expense ratios, obviously than investing in the overall market where you can get a lot cheaper. So 0.5% doesn't seem horrendous to me for this type of, kind of, market.
If we take a quick look at the top holdings, I believe maybe Nick might like it, because we have Palo Alto here as one of the higher ones. We also have Fortinet (FTNT 0.23%). Here's another big player in the kind of top ten holdings. They have roughly 31 holdings at the moment, so they're somewhat concentrated within the market but still have that kind of ETF approach. You also get some nice exposure to Crowdstrike (CRWD 2.03%).
Another one that I was kind of looking at is ticker CIBR. This is by First Trust (CIBR 1.25%). This one is a little bit more, I believe their expense ratio is a little bit more expensive. About 0.6%. They also do have a little bit more holdings. About 42. If we take a quick look at their holdings too, let's see, I was just there. This one might be a little bit different. You kind of have Crowdstrike, which is still more like a, I want to say, that's maybe not necessarily that shiny new object, but that's a very popular stock. About 6.5%. But you also have some of the other players.
Based on the top 10 holdings and what we've learned so far today, I do believe BUG seems a little bit more attractive. Not only because it has a cheaper expense ratio but because maybe some of those bigger players do kind of weigh a little bit more compared to some of these newer names. Nick or Connor, are there any ETFs in the cybersecurity that you guys have followed? Or between these two, are there any you personally might take a closer look into and do a little bit more research on?
Connor Allen: I would definitely look at probably the top 10 companies in the ETF and make your decision based on that. Like if you want a lot of Crowdstrike exposure, I would pick the other one, the First Trust ETF. Expense ratio 10 basis points between the two, I mean, I'm not, I'm probably not going to make my decision on the expense ratio. But I would just look at the holdings, and if you have a company that you like in one of them and not the other, go with the one you like.
Nick Rossolillo: Yeah, I posted a link to an article that I keep updated on cybersecurity, and both of those -- CIBR and BUG -- are both in there. I think they're both quality ETFs. I would lean maybe more toward BUG. That's just my personal preference though. I like the weighting toward some of the bigger names in the industry. I think that's important for me, just because they're going to be a little bit more stable. But you know, give both of them a look. Those are the top two. Those are the top two cybersecurity-specific ETFs.