How to invest in digital security

Digital security, including cyber security, is a sector set for growth. Rob Powell, product strategist for iShares at BlackRock, talks with IG about investing in a sector that offers the potential for growth, diversification and investment in a secure future.

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BlackRock has announced the launch of its new iShares Digital Security UCITS exchange traded fund (ETF) called LOCK, to add to its range of thematic fund products. Its nine product thematic range of ETFs is compiled of $4.4 billion of assets under management (AUM). Rob Powell, product strategist for iShares at BlackRock says ‘digital security is a slightly broader field than just cyber security’. He says ‘physical security is in there as well. And it also has the companies that are providing the parts that enable the cyber security companies to operate more efficiently’.

These are three reasons why BlackRock identified digital security as an investment theme.

Investing in a secure future

Each individual is expected to have more than ten devices connected to the internet per person by 2025, according to BlackRock. The investment manager argues that firms ‘stand to generate strong returns’ if they can keep their vast stores of information secure.

Diversification

This ETF aims to provide access to companies spanning across 31 countries in traditional and new sectors that will ‘shape the global security landscape’, says BlackRock.

Future growth potential

‘The cost of cybercrime is rising at an unprecedented rate’ BlackRock says, and argues that consumers and businesses are looking for the most effective solutions.

With data breaches at an all-time high according to DataBreaches.net and with 8.4 billion devices connected to the internet today, (and expected to grow to 20.4 billion by 2020 according to Gartner), BlackRock says ‘this huge network of interconnectivity will require vastly improved security’. ‘This is a truly global theme,’ says Rob Powell, product strategist at BlackRock. He says ‘47% of computers in China are affected with some kind of malware’.

BlackRock suggests that this LOCK ETF could be incorporated into a portfolio ‘as a satellite component or a strategic tilt within a global exposure’.

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