13 April 2023: Wealth Product Ideas
| Fund Name (Ticker) | iShares U.S. Aerospace & Defense ETF (ITA US) |
| Description | The iShares U.S. Aerospace & Defense ETF seeks to track the investment results of an index composed of U.S. equities in the aerospace and defense sector. |
| Asset Class | Equity |
| 30-Day Average Volume (as of 10 Apr) | 593,444 |
| Net Assets of Fund (as of 11 Apr) | US$5,845,159,428 |
| 12-Month Trailing Yield (as of 28 Feb) | 0.92% |
| P/E Ratio (as of 10 Apr) | 26.39 |
| P/B Ratio (as of 10 Apr) | 3.02 |
| Management Fees (Annual) | 0.39% |
Top 10 Holdings
(as of 10 Apr 2023)
- BUY Entry –114 Target – 120 Stop Loss – 111
- US-China tension. The timeline of US-China Relations shows how the competition between these two countries has intensified over the years. Both countries perceive each other as strategic rivals, and the increasing tensions have led to a security dilemma where each perceives the other’s military buildup as a threat, which in turn fuels further military spending. As a result, the US and China have become the two largest military spenders in the world, with their military budgets accounting for a significant portion of global military spending. The US has always heavily invested in their defence sector. For FY24, they requested a budget of US$842bn for their defence department, largely driven by strategic competition with China.
- Increased investment in defence equipment. Geopolitical tension is gradually escalating, due to factors such as the Russia-Ukraine conflict, China’s declaration of reunification and North Korea’s increased military exercises. All the above-mentioned acts have caused countries globally to perceive growing threats which will lead them to feel the need to bolster their military capabilities to protect their national interests and security. Contributing to an increase in arms sales from the United States to other parts of the world. Overall, the increased tensions and potential for conflict have led many countries to prioritize military readiness and preparedness, resulting in higher military budgets.
- Arms supply to Ukraine. Since Russia’s invasion of Ukraine in February 2022, there has been an increase in bilateral military assistance with Ukraine’s allies providing support. However, the provision of increasingly sophisticated weaponry has raised concerns among some allies about escalating the conflict, leading to a rise in arms expenditure and funding allocation.
(Source: Bloomberg)
| Fund Name (Ticker) | First Trust Nasdaq Cybersecurity ETF (CIBR US) |
| Description | The First Trust Nasdaq Cybersecurity ETF is an exchange-traded fund. The Fund seeks investment results that correspond generally to the price and yield (before the Fund’s fees and expenses) of an equity index called the Nasdaq CTA Cybersecurity Index™. |
| Asset Class | Equity |
| 30-Day Average Volume (as of 11 Apr) | 396,237 |
| Net Assets of Fund (as of 11 Apr) | USD$4,766,693,722 |
| 12-Month Trailing Yield (as of 11 Apr) | -17.96% |
| P/E Ratio (as of 31 Mar) | 28.44 |
| P/B Ratio (as of 31 Mar) | 5.03 |
| Management Fees | 0.60% |
Top 10 Holdings
(as of 10 Apr 2023)
- BUY Entry – 42 Target – 46 Stop Loss – 40
- Increase in Cybersecurity Threats. In recent years, the worldwide cybersecurity environment has witnessed a surge in threats. With the onset of the pandemic, cybercriminals capitalized on uncoordinated networks as companies shifted to remote working setups. In 2020, malware attacks increased by 358% compared to 2019. From here, cyber-attacks globally increased by 125% through 2021, and increasing volumes of cyber-attacks continued to threaten businesses and individuals in 2022.
- U.S. and China Cyberwars. U.S. and China have constantly been on edge with one another, accusing each other of cyberattacks towards each other. This can come in the form of different cyber attacks such as low-level phishing emails, against foreign companies for intellectual property theft. Due to these tensions that the opposing country is constantly conducting cyber attacks on the other party, both U.S. and China have been developing their cybersecurity technology in an attempt to reduce the cyber attack directed at them supposedly from the opposing party.
- Advancement in Technology. With a rise in AI technology recently, organisations can make use of this technology to improve their cybersecurity defences by enabling AI to better detect, understand, and respond to any potential threat. AI technology is also able to help organisations respond to and recover from cyberattacks more quickly and effectively by automating tasks such as incident response and investigation. However, the rise in AI technology would also help hackers to conduct more sophisticated and complicated cyber attacks. This puts an increasing emphasis on companies staying invested in their development of cybersecurity solutions to combat these cyber-attacks by hackers.
(Source: Bloomberg)
