New Defence Spending is Great News for This Cyber Security ETF

This week, the United States Senate backed a $708-billion military spending package by a margin of 87-10. The passage of the NDAA represented the 58th consecutive year that the Pentagon authorization was passed before the beginning of the next fiscal year. In a government supposedly paralyzed by partisanship, support for defence spending remains ironclad in both parties.
A renewed focus on improving cyber security and even offensive capabilities in cyber warfare has been a major focus since the conclusion of the 2016 U.S. election.

Paul Nakasone, the commander of the U.S. Cyber Command, has warned of "foreign adversaries" that are prepared to conduct operations against the U.S. in the near term. In February the federal budget earmarked $1 billion in spending on cyber security. This will only increase as this new form of warfare evolves.

Investors seeking exposure to this fast-developing industry should look to the Evolve Cybersecurity ETF (TSX:CYBR). Shares of the ETF were up 1.07% in early afternoon trading on August 3. The ETF is up 18% in 2018 so far.

Most of its top holdings are in the United States, with the exception of the Israeli firm Check Point Software Technologies Ltd. Israel is a global leader in cyber security and cyber warfare. The largest holding in the fund, Fortinet Inc., develops and markets cyber security software, appliances, and services. Revenues hit nearly $1.5 billion in 2017.

The trend to focus more on cyber security can be seen across the developed world. Investors would be wise to bet on this market going forward.