This stock ETF has gained over 65% in 1 year

This product is an interesting option in the exchange-traded funds (ETF) landscape. Focusing on the cybersecurity sector, a megatrend followed by investors throughout 2023. Let’s carefully review the key details of this ETF to evaluate its suitability within a diversified portfolio.

WisdomTree Cybersecurity UCITS ETF USD Acc

The WisdomTree Cybersecurity UCITS ETF USD Acc is an ETF launched on 25 January 2021, with assets currently managed of approximately €144 million. Its total physical replication of the WisdomTree Team8 Cybersecurity Index means that all components of the index are purchased, granting direct exposure to companies actively involved in providing cybersecurity services and technologies.

Price and TER

The ETF’s summary expense ratio (TER) is 0.45% per annum, a value to be considered in the context of cost management, in line with category products. The ETF’s distribution policy is in accumulation mode, with dividends reinvested in the ETF. The fund is denominated in USD, and has currency risk, as it is not hedged.

Allocation and Diversification

Detailed examination of the portfolio allocation of the WisdomTree Cybersecurity UCITS ETF USD Acc reveals a balanced combination of sector and geographic holdings. The top 10 holdings, representing 51.73% of the portfolio, reflect significant concentration, but at the same time offer reliable exposure to leading companies in the sector. CrowdStrike Holdings Inc is positioned as the largest holding with 5.87%, followed by Zscaler Inc (5.61%) and Cloudflare Inc (5.54%). This targeted selection of leading cybersecurity companies suggests a thoughtful and informed approach to portfolio construction, with a particular focus on industry leaders.

Geographically, the portfolio reflects a diversified distribution. The United States dominates with 78.97%, establishing itself as the largest contributor to the fund’s exposure. The presence of Israel (8.62%), Japan (5.07%), and the Netherlands (4.59%) contributes to broader geographic diversification.

This geographically balanced distribution, combined with significant sector concentration, provides an opportunity for investors to benefit from both individual company strength and global diversification, mitigating risks specific to a single market or region. Furthermore, the 100% allocation to the IT sector reflects high specialization, providing investors with targeted exposure to the topic of cybersecurity, an increasingly critical component in today’s technological environment.

Yield

The WisdomTree Cybersecurity UCITS ETF USD Acc has demonstrated impressive short-term performance, reporting a significant increase of 65.93% over the past year. This reflects the solid performance of the companies included in the portfolio. The steady growth over the last six months, with an impressive +33.78%, testifies to the attractiveness of the cybersecurity sector and the effectiveness of the index’s physical replication strategy. However, it is important to note that past performance is no guarantee of future results, and investors should carefully evaluate the market environment and industry outlook before making investment decisions based solely on the ETF’s historical performance.

Risk and volatility

Looking at the risk profile, the ETF has a 1-year volatility of 26.27%, highlighting some variability in short-term returns. The maximum 1-year drawdown of -14.76% indicates the WisdomTree Cybersecurity UCITS ETF USD Acc’s ability to handle losses in adverse market periods.

However, the maximum drawdown since the launch of -48.39% suggests higher long-term volatility, requiring investors to take a thoughtful approach to risk management.

Conclusions

The WisdomTree Cybersecurity UCITS ETF USD Acc is an investment vehicle that offers direct exposure to the cybersecurity sector through a physical replication of the WisdomTree Team8 Cybersecurity Index. Its recent performance has been positive, but investors should carefully evaluate the associated costs and consider the concentration of the top 10 holdings.

Geographic diversification is balanced, but 100% sector concentration in IT could pose a diversification challenge. Investors should carefully consider whether this ETF is suitable for their needs, taking into account the risk profile and associated costs. In conclusion, the WisdomTree Cybersecurity UCITS ETF USD Acc is an option to consider for those looking for targeted exposure to the cybersecurity sector within a diversified portfolio.

Disclaimer The information and considerations contained in this article should not be used as the sole and principal basis on which to make investment decisions. The reader retains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk appetite and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation for public savings.

Original article published on Money.it Italy 2024-01-17 17:31:47. Original title: Questo ETF azionario ha guadagnato oltre il 65% in 1 anno