Cybersecurity is a hot topic, but is it a good investment?

Maddy: [00:00:19] Hello and welcome to your In Good Company, a podcast that makes investing accessible for everyone, I am Maddy Guest. And as always, I'm in some very good company with my. Co-Host, Sophie Dicker. How are you? Do you like it? New little set up? 

Sophie: [00:00:33] I love it. 

Maddy: [00:00:34] But today you have recently moved house and we have set ourselves up in your house and it's stunning. 

Sophie: [00:00:39] I know I said it. I said it sounded like the spare bedrooms becoming a podcast studio right now. He's like, I didn't sign up for this stuff, but fine. 

Maddy: [00:00:48] Hey, that's the de facto relationship for you. 

Sophie: [00:00:50] That's what a relationship is all about. Compromise. But how's your week, then? Today is a Saturday morning for context. Remember recording a lovely Saturday morning? You know.

Maddy: [00:00:59] My wake is really good. Thank you. I have actually been listening to a lot of Flex and Froome's podcasts, and have been getting really into it. And the other day Flex was talking about a personality test that you can do on this app that has lots of different personalities anyway. Naturally I downloaded it. I've forgotten right now what it was called, so don't come at me. But you're going to laugh at this. I did this personality test, and it told me what my three most annoying, like habits are. 

Sophie: [00:01:29] Okay. 

Maddy: [00:01:30] So number one is burning yourself out. Standard. [00:01:34][3.5]

Sophie: [00:01:34] Yeah. Okay. Yeah. What are you in Aries? I say that Aries always burns the candle at both ends. 

Maddy: [00:01:39] As I you know. 

Sophie: [00:01:40] I know. But you told me once that that's what he's doing. Yeah. I'm not saying. Yeah. 

Maddy: [00:01:43] Feel like this is why we're doing this. Number two is. Doesn't understand that nothing good happens after 2 a.m.. 

Sophie: [00:01:51] Yes. You like to say.

Maddy: [00:01:53] And number three is always signing up for extracurriculars. 

Sophie: [00:01:56] Oh, my God. 

Maddy: [00:01:58] Oh, it's like this best. Now what? You just noticed me. 

Sophie: [00:02:01] That was funny. Remember at FinFest, at one point, I think it was like 11:00, mind you had been going since 9 a.m., like, hot going. And I said to Mads or Mike. 

Sophie: [00:02:10] I have to tap out. And she's like, No, like I heard karaoke. Like, I'm out. I'm going home. Yeah, I know. I can't help it. So I messaged you during the week and I was like, We're talking about what content I kind of want to produce this week. And I said that we've been hearing a lot about cybersecurity, especially in Australia. We've had a couple of different cybersecurity threats, attacks happening to some big companies like Medibank and Optus and kind of tying into that last week or the week before we were speaking about industries that are at an inflexion point and we kind of mentioned cybersecurity as well. So I thought as a total novice because I really feel like I don't know a lot about the cybersecurity space, like maybe we should unpack it and talk about what's happening and like is there an investment opportunity there? 

Maddy: [00:02:59] Yeah, well, probably a good time to say not financial advice as well as just two girls chatting about finance, because I also don't know anything about the cybersecurity side, but I thought this was a really good idea because it was a classic or perfect example of us going about our daily lives and I guess sort of noticing or identifying quite a big trend going on around us and actually having a think about, okay, is this something that is an opportunity to invest in? 

Sophie: [00:03:26] Yeah, so little recap in the Australian landscape. We've recently had Optus, which is one of our bigger telecom providers. They hacked and it affected up to 9.8 million Australians, myself included. 

Maddy: [00:03:39] With Vodafone. 

Sophie: [00:03:40] I'm Vodafone with my phone, but internet with Optus. 

Maddy: [00:03:43] Yeah, I didn't even think about it. 

Sophie: [00:03:45] Yeah. So I got a little email saying, hey, I got a new driver's licence and I. Was like, Yeah, because, oh yeah. Well because we have a friend which okay, really short but we have a friend who has been hacked and he's now owing like $50,000. To the ATO. So I was like, I'm just going to get a new driver's licence, I'm going to take the conservative route. But pretty much a lot of that data has been, I guess, taken, and I don't know exactly what's happening with it. It's still under investigation. Yeah, but the other one is Medibank. 

Maddy: [00:04:16] Yeah. Well I mean before we move on, Optus was the biggest hack in Australian history. Wow. 

Sophie: [00:04:21] Pretty, pretty scary. And also people that talk about it say it's so funny because this person who has hacked it is being like. I would like $1 million and they might ask for more. Yeah, they're like $1 million in 20 dates here. Like, are you serious? 

Maddy: [00:04:38] So like you said, the next big one has been Medibank and they actually released a statement saying that all customers' data has been accessed by criminals. 

Sophie: [00:04:46] Yes. And I saw that some of that data was sold overseas already. And I think just like the issue with that is that you can get into trouble with your bank and your money being stolen, your identity. As we said, our friend has. $30,000 owing to the ATO. So I think people are just a little bit nervous because it's like your data, your very personal data that's been taken. Medibank as well as a health insurer like they have very private information about you which can affect. I mean, I don't know how they would use it necessarily. Yeah, but it's like, ooh, you get your teeth. 

Maddy: [00:05:19] You have to go to the dentist a lot. Well, anything you don't want. Yeah, you don't want to be in the public sphere. Optus isn't listed, but Medibank is a net share price. Fell over 20% on the news of the hack. 

Sophie: [00:05:31] Yeah. And another one last one I thought was funny was, you know, the phone was not funny. But I was like, what would they do with my wine preference? Yeah, I'd. Be like, I think almost they'd be like, We don't want to take this woman's money because we know she doesn't have any money. And then look at how much she spends online, but.

Maddy: [00:05:47] She buys five bottles of wine.

Sophie: [00:05:49] I feel like I'd be safe there, but there'd be others that wouldn't be, you know. 

Maddy: [00:05:52] I did laugh, and I saw you put that in. You wanna give everyone a brave background very quickly? What actually is venom. 

Sophie: [00:05:58] So Venom Mofo is like an app where you can order wine there. You can also write wine and like give your opinion and review it and whatever. 

Maddy: [00:06:07] So I'm reviewing the Aldi wine like yes, get this. Yeah, but fun. It's the code. Lemieux It's very important. Anyway, so I thought we'd do a bit of a, the what, the why and then jump into a couple of ETFs that we have been researching in the cybersecurity space that we can give some pros and cons about us. 

Sophie: [00:06:30] Before we jump into it. I thought like I'd read you some cyber facts, okay? And I just want to get your reaction to them. 

Maddy: [00:06:37] You write in our doc Maddy, don't read this website, smiley face. So I haven't read the website. 

Sophie: [00:06:42] I was gonna say, did you read the website? 

Maddy: [00:06:44] Look, I feel like I probably wouldn't. If you hadn't put it in and that made me really want to write it, but. I didn't. 

Sophie: [00:06:48] Okay. So how often do you think there is a cyber attack globally? 

Maddy: [00:06:55] Okay. I was actually looking this up this morning. It's like every 30 seconds. 

Sophie: [00:07:01] Every 39 seconds. 

Maddy: [00:07:03] Oh, down. Sorry, but that's a lot. Yeah. 

Sophie: [00:07:07] And over this whole episode, like. That's payback time. 

Maddy: [00:07:10] Oh, my gosh. We should do a little. Digging and 39 seconds, and it's like another. Hack. Another hack that would be very annoying for me. 

Sophie: [00:07:17] So annoying. Okay. What percentage of cyber attacks target small businesses? So like your mum and dad that don't have a lot of cyber security protection.

Maddy: [00:07:27] Interesting, because they're likely to have less data. But. Easy wins for the hackers so I can 80%. 

Sophie: [00:07:36] Ooh halve that 43% still pretty big. Though. 

Maddy: [00:07:40] But also like less pay off. Also I think the hackers when they're hacking do it to sell the data. Right. So I guess they're going to get a lot less money for things like small businesses. 

Sophie: [00:07:48] Yeah, but maybe if there's more hacks of small businesses, you accumulate. Yeah. Since COVID 19, what is the increase of reported cyber crimes? 

Maddy: [00:07:58] Would it be bigger and everyone working from home less protected? Would we go like a 100% increase? 

Sophie: [00:08:04] We're talking 300%. Yeah. They are having a bachelor party next week. Hey, I'll don't do one more and then we'll move on. What is the average share price fall after a data breach of a public company, obviously. 

Maddy: [00:08:24] Oh, that's a very good 10%. 

Sophie: [00:08:27] A little bit. Lower, 7.27%. very specific. But that's still a lot. Like if you put in $100 and then it falls 7%, you're at 93, is that right. Is that good maths? Yeah. Reckless. I think that's a lot just for cyber attacks and how frequently they do happen.

Maddy: [00:08:45] And obviously it very much depends on the level of the breach as well. Like we saw Medibank's up 20% the other day. 

Sophie: [00:08:50] Yeah, insane. Anyway, I said at the beginning that this is an industry we really don't know a lot about and now we're doing an episode on it. So where did you start your research for what cybersecurity is? 

Maddy: [00:09:01] Yes. So I think going right back to basics, it was kind of like first point of call was figuring out literally what cybersecurity means and I guess what it encompasses in the term, trying to get a bit of a broader understanding about things like the industry itself. So I, the first thing I literally did was pop cybersecurity into my Spotify. I came across a great podcast called Cybersecurity Simplified, Not Recommended. So I listened to a few episodes that sort of gave me a nice overview. 

Sophie: [00:09:32] So what is cybersecurity? 

Maddy: [00:09:35] So the thing is that. The podcast really taught me was. Cyber security is a practise and not a product. Yes, I like it. So the idea is that the bad guys are out there and they are doing everything that they can to get your data. So cyber security is actually the, I guess, act of continually protecting those assets that hackers might want to get at. And it depends on what industry you're in. So if it's banking, it would be financial records. If it's government, it might be classified programmes, if it's health care, patient information. [00:10:04][29.4]

Sophie: [00:10:05] Yeah, and I think that's interesting because when you think about businesses and businesses you're investing in, like if they have the mind frame, they've got to continually look after their cybersecurity space, practise good practises. And it's not just like buying something off the shelf and like making like hoping that it works because cybersecurity is continually evolving. 

Maddy: [00:10:23] Yeah, I think what it got me thinking about more than I ever had previously was how much it comes down to actually the people and the leadership. Like it's so important for people in a company to set the tone about this stuff because you really can't buy a random product. Yeah. And set it up and think that you're protected because you have got like some of the smartest people in the world continually trying to break down your walls and get your information. 

Sophie: [00:10:47] And I'll give a good example of that. I used to work at a company that was very tech-savvy, and it was my first real job back working at five. 

Maddy: [00:10:56] You go girl go go. 

Sophie: [00:10:58] And brilliant company and that day dot it was like cybersecurity was ingrained in us because I mean they work in that space as well. But we're talking like you can't leave your computer open even though you work on the floor. We've got different coloured badges so people know which level you're allowed on. Like we're talking like security screens, even when I'm like, even at work, like working like. And that was really ingrained by the people, like the people that I worked with every day. It was like, Oh, why aren't you doing that? Why aren't you doing that? Why are you doing that? So I feel like cybersecurity as a practise is like, yes, you've got products to help you, but if you have people that are like leading it almost. And then in contrast with other workplaces I've been out, you can really tell that like where like it's ingrained and where and it does come down to the people. 

Maddy: [00:11:42] Completely agree. The other thing that I did was I actually typed cybersecurity into Google, but then hit the news tab and had a raid of articles and things did come up recently. And I feel like that's also a really good way to sort of get your head around what's going on in the industry at the moment. What are some of the trends? 

Sophie: [00:11:59] So we know that cybersecurity is kind of a practice to protect our data. Yeah. Why are individuals and businesses caring more about it at the moment? 

Maddy: [00:12:11] Well. Let's break this down. And I guess let's first think about it from a customer perspective of these businesses. So yeah, you and I, as you know, you're an Optus customer. I think it has to come down to pure inconvenience, like our friend who's having these issues with you all at the moment, like sitting on the phone to the ATO or to Optus or to the police for hours and trying to tell them that like my dad has been hacked. Well, about like, oh my gosh, I do not have time for that. 

Sophie: [00:12:39] She told me the other day, because we work together, she said she calls them every Monday to get a status update and she says she never gets through. And I'm like just a piece of advice and it's totally unsolicited. Maybe try to call them not on Monday and you might get a better result because you. Probably got some really grumpy people like, you know, Monday is a bad day to get people sometimes. And she's made like a weekly. Call and say. 

Maddy: [00:13:04] Hello, that's it. Gosh, that's like that life admin is just something that you don't know. 

Sophie: [00:13:08] Yeah. And pure inconvenience. But then the other thing would be like, you know, say if your bank is hacked and your money being taken, like, that's a massive thing that affects people. 

Maddy: [00:13:17] It's that time I thought my bank and my bank account had been hacked and someone was charging Netflix. I remember I spent so long. On the phone to Westpac to get them to reverse the charges. And I was like, it's hacking it now, it's not. And I'm like, No, no, it is over an hour. And I realised it was. Me and I was like, I've gone too far, I've gone too far, I have to stick with this. Yeah. 

Sophie: [00:13:42] So I think that consumers are becoming more aware of it as we use more technology, there's more potential for infiltration, etc. and everything's connected these days. 

Maddy: [00:13:51] So I'll tell you one thing that I've been thinking about so much lately. Be real. Prime for Hack is so many people take me on rails. 

Sophie: [00:13:59] So like, why would they and what would. 

Maddy: [00:14:00] They say your. Computer screen. At? 

Sophie: [00:14:02] Oh, no. I literally every time I do a baby-like shot all my time. 

Maddy: [00:14:06] Oh, no. Because I'm so scared of it. But I'm trying to pose like, I'm actually just waiting for, like, a phone on my email or something being like, now we know you'll love to be real. But her. 

Sophie: [00:14:18] And I'm. I'm such a nosy nelly. So obviously people got their screens on ice.

Maddy: [00:14:23] So do I. 

Sophie: [00:14:24] That's what I mean. That's what I mean. 

Maddy: [00:14:26] So I would love to hear from the listeners if your company has sent out an email about Bayer asking you to make sure that you are not posting your work on your laptop on my rail. 

Sophie: [00:14:37] So. Individuals care about it. We care about it because it can affect us. We can lose money. Use our identity to a point. Why is a company caring about it more and more? 

Maddy: [00:14:46] So I guess the major overview is like the financial implications. So literally like a company , sorry, hackers stealing your money. There are legal implications, having to go to court. If it's a major hack, it's probably something that Optus and Medibank are both dealing with at the moment. Resources like you have to spend time and money dealing with the problems. Loss of customer trust, which is a really big one and I think we should go into that a little bit more in a second and reputational damage, which I think sort of links into that. 

Sophie: [00:15:16] Yeah, like for example, like really quickly, like I look at Medibank now and I'm like, do I want to be a part of the health insurance community? Like it's so simple and so like that whole loss of trust and reputational damage is so quick and it's over like one thing completely. 

Maddy: [00:15:31] I think the best example of that is 56% of current Optus customers are considering changing telcos, 56% it's a lot and 10% have already changed as a result of the hack. 

Sophie: [00:15:42] Yeah, like I changed from Optus, not because of the hack but because I moved house and this house. I mean now we already had an internet plan but like on the phone it was so hard to cancel. They were like, Do you really want to leave? And I'm like, Yes. Guys like, Are you seriously asking me this? I mean, it actually wasn't crazy enough. Yeah. And I'm like, I had. To change my identity. No, joking 

Maddy: [00:16:04] I think something else that was a bit interesting was PDVSA did a study where they actually asked company executives, How is your cybersecurity budget changing in 2022? And I think this is what really ties into for me, they're starting to build an investment case for this area. 25% of executives said that they were increasing their budget by 6 to 10%, which is up from just 22% last year. So more people are increasing their budget by 6 to 10%. And then 26% of executives said that they would increase their budget by more than 10% and that's up from 8% last year.

Sophie: [00:16:41] Yeah, I think that comes into our argument like the inflexion point. So if you haven't listened to the previous week's episode, we talk about like, yeah, we just talk about like when there's like certain factors or tailwinds that are coming together. One of them is when you've got money spent. So in this case, we've got companies looking to spend money and cyber security said money's being pumped into the space that way. But also governments like our recent federal budget, they are pumping an extra like $45 million into this space. And that goes to like people that are companies that are getting grants like China, cyber security. So it's just like when you look at it from the perspective of where the money is coming from, it's the big dogs, it's the companies and the governments. Yeah. So if money is being pumped into the space, it's likely a space to grow completely. 

Maddy: [00:17:24] Where did you get your info? 

Sophie: [00:17:25] I also googled cyber security on Spotify. 

Maddy: [00:17:29] Go on. Spotify.

Sophie: [00:17:31] Yeah. Yeah. And so that is the search bar I guess. Yeah. That's sure. Yeah. I heard on Spotify. God read the same verse and. Um. No, but I was actually driving home from the long weekend and I was like, can't research. So I was just listening to some stuff. And I also chatted to a couple of people who I used to. Work with now. Who I was saying that we worked at a kind of tech company really into it, just like get some of their thoughts, nerd detailed like what is cyber security, but just like thoughts about, you know, how we implement those kind of practises in the workplace. 

Maddy: [00:18:08] I definitely learn the most when I chat with friends about this stuff. Like, Yeah, I retain the most information. I think when I listen to podcasts I'm like, Oh, that's interesting. And then I forget it. Yeah, because if I actually talk to friends about it, it stays in my brain. So. So I can say that you have put some sort of caged friends in this space into our docs. I'm going to quiz you a little bit. I want you first time in the question, and then I'm going to ask you very specifically for like what actually is the investment opportunity or an example of an investment opportunity from that trench coat? What's your first round? 

Sophie: [00:18:39] First one is trends relating to cybersecurity. So Iot, which is Internet of Things, pretty much it pretty much just means like all your devices connected, like all your devices on the Internet and they're all connected. So your washing machine will be connected to your phone. You can start it when you're at work. Your cars can connect you to your phone. Like a good example is Tesla. Is like your. Key is in your phone and like, got it. So a connection. 

Maddy: [00:19:04] So the trend is that we as consumers are I guess more connected than ever before, which is like a potential vulnerability to cyber. Yes. Security threats. Yeah. Okay. 

Sophie: [00:19:15] So Iot is creating new cybersecurity threats because we have a lot of devices that we're using. 

Maddy: [00:19:20] Yeah. Potential investment opportunities. 

Sophie: [00:19:23] How we think so the way I thought about this was if you've got more devices, you have a lot more data and that data needs to be stored somewhere. So I think where I'm looking for investment opportunities, like where am I personally spending my money to have my data stored? And I know it's a classic example, but like. Apple. Like I'm now paying like the highest TR of cloud storage a month because I have so much body data. 

Maddy: [00:19:45] And ah, I think it's our recordings on my. Laptop, life saving bullets, but it's. 

Sophie: [00:19:50] Also really convenient because I have all the Apple products. So for me it was a really quick like, where am I putting my money? It's at. Apple. But you can also look at other, you know, cloud data storage. And it was a big trend over the 2020 period. A lot of these tech companies are coming through, like Megaport. Or. So. Yeah, when I think of the Internet of Things, I think the investment opportunity is cloud storage. 

Maddy: [00:20:10] Internet of Things. It's such fun. 

Sophie: [00:20:12] Internet of Things. Yes, very funny.

Maddy: [00:20:15] All right. Next Trend LLC saying. 

Sophie: [00:20:18] Targeted ransomware attacks. 

Maddy: [00:20:20] So let's just break this down a second, because ransomware is one of those words that I hear a lot and I don't actually really know what it means. 

Sophie: [00:20:27] I don't really know what it means either. But it's pretty much like hackers using software to hold your information at ransom, so. AJ, AJ, Medibank or Optus saying We've got all your data. Give me $1,000,000. 

Maddy: [00:20:43] That's a million. Yeah. Still 50. You you're. Wrong. It's a lot of money, but like, you could have a. Small. Investment opportunity. 

Sophie: [00:20:51] So just, just seeing that, you know, that's enough. But actually, well. 

Maddy: [00:20:56] It's just not really high because I. Was like, this is where I start to really lose. I'm like, How am I going to. Like, I don't know. Anything about it. 

Sophie: [00:21:04] Yeah. And to be honest, neither do I really, really do I. But again, I don't try and think back on what our companies might be using or what we might be using. I specifically don't think I'm using anything, but I know that our company would, for me personally, I don't know. 

Maddy: [00:21:18] Is out there. Yeah. So he's vulnerable. 

Sophie: [00:21:20] But companies will employ firewalls and stuff like that to stop hacks coming through. So I didn't know a lot about it but did a little bit of Googling and there's some massive companies out there that it listed, usually mainly in the U.S. But one example is a company called Fortinet, which works in that space, and it's pretty much in all of the like, cybersecurity ETFs. 

Maddy: [00:21:40] Not that one is listed on the Nasdaq. Nasdaq. Yeah. Okay. Another trend I'm going to turn the tables now and say if you also came across this one, I think it's pretty basic, to be honest. Multi-factor authentication. 

Sophie: [00:21:53] Yes. 

Maddy: [00:21:53] So MFA love to hate it. Hate to. 

Sophie: [00:21:56] Love it. Love it. 

Maddy: [00:21:57] Just love to hate it. So good. Important, but it guard. It's painful, isn't it? 

Sophie: [00:22:03] It is. And I think a lot of people have to use it like for everything. Now you're banking for work. I just think straight away to places like Google and Microsoft like this, they have massive multi-factor authentication platforms. Yeah, I know that. I use the Microsoft one for work. Yeah. And then also in that space, like I always think companies that have it like for example, we bank with Macquarie for our. Podcast. 

Maddy: [00:22:26] Which play Macquarie slogan I Bank with. 

Sophie: [00:22:29] Macquarie. Yeah, I like big Macquarie. But their app is always really hard to get into if you've ever forgotten your password. It's so much like layering of multi-factor authentication and sometimes I find it so frustrating, but I'm like, I find this so hard to get in. And so it must be like really good technology. 

Maddy: [00:22:45] Question Without notice when you like on your banking app or you're setting up anything online or something and you know how it gives you the option to do MFA. Yeah. Do what you do. 

Sophie: [00:22:55] I do now because I have a lot of those apps already downloaded. Yeah. And then after honestly just being more aware as a consumer about my data myself.]

Maddy: [00:23:06] I think I can honestly say prior to these up to say many bank hacks, I was a no. And it happened to me the other day and I was like, You know what? I'm going to do it. It's worth the extra 2 seconds that it takes for them to send you a text and you have to get your phone out to be safe.

Sophie: [00:23:20] Nice. I'm proud of you. 

Maddy: [00:23:22] Thanks. Any more trends? 

Sophie: [00:23:24] I think one lesson that I've noticed or haven't spoken to a lot about with friends is like tools that you use to work remotely. Like, I don't know if you have like when you work from home, you have to have a VPN connection. Yeah, which I don't really know what that even really means. But I think it's just that you go on your work network. 

Maddy: [00:23:45] Yes. Which is black. Meant to be very secure I believe. 

Sophie: [00:23:48] Yeah. So I just said that I'd spoken about it with people. It's like I don't know exactly where the investment opportunities are, but I've been thinking more and more about COVID. You had companies like Zoom or Peloton go up crazily because of the COVID trend. You need Zoom all the time. I mean, Peloton doesn't really relate to work that's just like an exercise bike, but like, what are we still using now in the works now that things have settled in the working from home environment? And I know it's I know I've already said it, but I always think like Microsoft. People. Use teams like that's how VPNs are all like. So I just, I don't know, they're basic ones, but I'm like, Oh my God, I use that every day. 

Maddy: [00:24:24] No, I like it though, because it's simplifying what could otherwise be quite considered, quite a complex and sort of overwhelming topic into actually. Well, how does it interact? Like how do I interact with that day to day? And then is there an investment opportunity there?. 

Sophie: [00:24:38] 100% We're going to take a quick break for our sponsors, but we'll be right back to jump into three cybersecurity ETFs that we have looked into. And we'll tell you about. 

Maddy: [00:24:51] So. So before the. Break, we talked about how we've been noticing a lot in the news recently. And I guess in society more generally, a lot of our friends have been impacted, a lot of people we know have been impacted by cybersecurity. And we're talking about our process for sort of noticing this trend and actually having to think about is this an investment opportunity and how do we sort of take that next step to learn about it, educate ourselves and determine whether it is or not? I think we're both pretty clear that this is probably an area that is a bit outside of our expertise as much as we have enjoyed learning about it. And I think one really great way, if you are still interested in it without sort of going full blown into picking individual companies to invest in as a result of your research is ETFs. 

Sophie: [00:25:39] Yes, that's a broad it's. 

Maddy: [00:25:41] Like a it's a way to get broad exposure to a thematic. Yeah. Without having to pick one company that you really Barkow believe in. 

Sophie: [00:25:49] Yeah. Because I think we've always said invest in what, you know, if you don't invest in what you know, diversify.

Maddy: [00:25:55] So we have. Noted down a few different ETFs that I guess sort of give exposure to this industry as an example of different ways that you could have a look in and of course, do your own research to potentially add exposure to cybersecurity to your investing portfolio.

Sophie: [00:26:10] Yes. So the first one we look at is a ETF called Hack, which is by Betashares. Yeah, we actually pitched. This. Like you, our seven ETF pitch nights from like 20.

Maddy: [00:26:21] 27/8 for seven days. 

Sophie: [00:26:24] I go down. Yeah, well I don't know why we did that. 

Maddy: [00:26:25] But so innocent. I think we're going to be on lockdown for seven days. 

Sophie: [00:26:28] Well, I know, but Hack is a good one because it's quite broad. It tracks a cybersecurity index and it has about 35 or 37 companies in the portfolio and I think it's a very well known Australian ETF. 

Maddy: [00:26:43] What I found interesting to note is that the top three holdings, I guess just for familiarise yourself with some of these companies are in Focus CrowdStrike Holdings, which I hadn't heard of and Cisco Systems, it's also very heavily oriented into US companies. So 82% of the holdings are based in the US, 6% in India and 3.8% in Israel, which is apparently a very up and coming area in cybersecurity. 

Sophie: [00:27:08] Yeah, 100% of them are like private equity funds that are investing in like Israeli companies. 

Maddy: [00:27:13] It's very cool. 

Sophie: [00:27:14] Yeah, fascinating. But we would say with this one, like if you're thinking about investing in a cybersecurity ETF, this one is quite concentrated like 35 companies. Isn't a lot of companies compared to other broader tech ETFs. So I think the pros for this is that there's potential upside in price for the ETF just considered like that. There's more risks, obviously more risk, potentially more reward. But the cons are that, again, if you're not quite across the space, it can be a little bit riskier because you're not always across the kind of information. So with risk comes reward, but also can be the other way around. Yeah. 

Maddy: [00:27:51] And one thing I will note as well, because I think it's good to compare as we go through this one has a management fee of 0.67%. 

Sophie: [00:28:00] That's the second ETF is listed in the U.S. It is called the iShares Cybersecurity and tech ETF. And this is I hack. So it's I h a K. 

Maddy: [00:28:13] And this one tracks emerging market and develops cybersecurity companies involving hardware, services and other areas is the broadest state. 

Sophie: [00:28:21] It is very broad, I know, but this ETF gets a little bit broader sensitive like the 35 company range. We're now sitting at the 52 types of stocks in company seeing. So even though this one is cybersecurity focussed, it does have a little bit more like the tech and the hardware involved in it. So it kind of broadens your risk out a bit. A little bit. 

Maddy: [00:28:39] Got it. And this one also has a slightly lower management, 4.47% compared to the .67 percent of hack. 

Sophie: [00:28:47] And this maybe just comes with the fact that it's got more stocks involved. And as we said, there's adjacent spaces. So we've got like the cloud infrastructure with a company like MA, which I've never heard of. I have. Oh, okay. That's good. It is one of us networking equipment, design, network equipment design and also like digital document signing. So things like DocuSign as well. So, so it's a little bit broader. 

Maddy: [00:29:10] So like we said, a pro for this one is slightly greater diversification, but a con is it has performed historically slightly worse than some of the other US listed ones and that's probably again by nature of having more companies in it. 

Sophie: [00:29:24] Exactly. And in the final one, this one's actually a lot broader and it's more of a technology ETF that has the cyber aspect. But I thought it would be a good one to bring into the conversation because I know we've hopped on about it, but we don't know a lot about this space. So if you really don't feel comfortable being like 50 companies in the cybersecurity space, maybe you want to go a little bit of a broader technology one. So this one's called the Vanguard Information Technology. F and it's got some serious life to it. It was founded in 1976. Since what's so much of a little bit of a long life? Looper, technology, you know, cybersecurity space. I was kind of shocked by this. 

Maddy: [00:30:04] So this one encompasses cybersecurity as technology companies have developed, but it also has other trends like cloud computing and semiconductor design. 

Sophie: [00:30:13] Yeah. And it has 359 companies encompassed within the ETF. So now we're talking. 

Maddy: [00:30:19] Big, big, big.

Sophie: [00:30:20] Big. And it's actually had a really good annual return of about 13% a year, which is, you know, above the average. So diversified, heavily diversified across lots of sectors. It's not just specific to the cybersecurity and what's happening there. Great. 

Maddy: [00:30:33] So I guess that is how we would go from like identifying a trend, chatting to our friends about it, noticing things going on around us to, I guess, learning about a new area and then potentially sort of kickstarting that research process into different ways that you can invest in the thematic. 

Sophie: [00:30:50] Yeah, I really think with one like this, I don't know. I don't think I'd ever put my money into a single stock with cybersecurity, like. Would you? 

Maddy: [00:30:58] Don't know enough about it. Yeah. 

Sophie: [00:30:59] Yeah, I feel like and our producer Sascha was speaking to her the other day and she made a really good point of saying that she was speaking to a friend who's in the cybersecurity space and she had invested in an ETF in the space and then was speaking to them about it. And she was like, Oh my God. Like every time I speak to you, you've got brand new information, there's a new trend, something happening. So she felt good about being in the ETF, but then it was also like it just changes so often. Yeah, like if she tried to invest in something similarly, even if he told her what to do or like, you know, got information or researched with him like in a year's time, it could be completely different. 

Maddy: [00:31:34] Completely agree. So so have you talked earlier about how you're gruelling on Spotify, which I think is just the perfect segue to Cherry, our recommendations. What have you got for me this week? 

Sophie: [00:31:44] So the first one is one to do with cybersecurity. If you want to learn, It's how I built this episode with Cisco about Cisco Systems. 

Maddy: [00:31:53] Such a good episode. 

Sophie: [00:31:54] Yeah. I feel like I sent you that like July. 

Maddy: [00:31:57] July. 

Sophie: [00:31:58] Last year because I remember I was away and it was just about how his was Bill Top and then how the founders would shoot down to the company. You know, little Cisco, if anyone's ever seen it, it's like it looks like a little bridge. It's meant to be the San Francisco bridge. Just go and have a listen to that one. And then the other one that I've got, which is non investing related, is people probably have had about this before, but I'd never heard of it. The Human Lab, I had friends down from London last week and one of the girls recommended the human lab to me and it's just like two hour episodes. They're really long, but all sorts of different, like wellness, self-help, kind of topics. Interesting. I really enjoyed them. I only get through like half an hour at a time. But yeah, that's meant for your recommendations. 

Maddy: [00:32:43] I this week I'm recommending an article that my housemate sent me. It is called How Thinking About the Future You kind of Build a Happier Life. Oh, it was super interesting. The concept is basically like if you imagine two circles, how much the two circles cross over can be indicative of potentially how happy you are. So one circle is your current self, the other circle is your future self. Some people are very highly correlated. So it's like you can really say what your future looks like. And the result of that is that if you can visualise it clearly, you're much more likely to exercise more because you're more connected to your future self. You're more likely to save more money or invest more money or be more financially responsible because you're more connected to your future self. versus if you don't say that person at all, you're much more inclined to behave erratically, be more spontaneous, and, you know, spend money on things that don't necessarily align with who you want to be in the future and things like that. You get it?

Sophie: [00:33:43] Yeah. It's interesting. I never really thought about my future self, to be honest. But then I also do think that I do a lot for my future self. Yeah.

Maddy: [00:33:52] It sent me into a bit of an existential crisis of. 

Sophie: [00:33:55] Loss always happens. You read articles and then you. Go, Oh God,. 

Maddy: [00:33:59] Well, I just. Can't even say what my life looks like in six months, to be honest. Yeah, but it really did get me thinking. And one thing that he suggested I do, which is a bit of a shameless plug from him, but I'll share it with you anyway because I'm going to do it is there's this product called Future Me, which is very actually slow. 

Sophie: [00:34:17] Yeah. 

Maddy: [00:34:18] But it's basically like you can go online or download the app and you can write letters to your future self. And it's just a way of getting yourself thinking about, I guess, what. 

Sophie: [00:34:29] You would want to in the future. 

Maddy: [00:34:30] What you want, and you can set like time so that they come back to you in the future, which I thought was a really cute idea. It's like that classic time what we used to call it. I feel like we did them as a time warp. 

Sophie: [00:34:40] Like time capsules. 

Maddy: [00:34:41] Time capsules? Yeah. 

Sophie: [00:34:42] Like you. We're never going to say that again. 

Maddy: [00:34:45] Yeah. What happened today. 

Sophie: [00:34:46] Is today anyway I think that brings us to the end. Our cyber security episode. Hope you've enjoyed learning something new today. We've done a lot of learning this week. But if you want to join us on any of our social platforms, you can find us why? It's a podcast on Instagram. Just make sure it's not like a YIGS podcast. We've got lots of scams at the moment. 

Maddy: [00:35:08] No underscores either. 

Sophie: [00:35:10] Yeah, no undisclosed plays. BLOCK And report we'll report first and then. BLOCK. Maddy, what's our Facebook?

Maddy: [00:35:16] YIGC investing podcast discussion group. And if you enjoy this episode, we would love it if you take a screenshot and shared on your Instagram or send it on to a friend who you think might enjoy it too. We love doing this. We work very hard and it's the best way. For us to grow. 

Sophie: [00:35:30] We are such hard work as we are. I love it. Well, thank you very much for listening. I really catch you next right after you have been.