I think this FTSE 100 stock and this fund demand close attention next month. Here’s why.
L&G Cyber Security ETF
Investing in individual shares often delivers market-beating returns, though risks can be higher. Exchange-traded funds (ETFs), on the other hand, can help investors target huge gains while also diversifying for added protection.
The L&G Cyber Security ETF‘s (LSE:ISPY) one such fund I think’s worth considering in June and holding for the long haul. With the digital realm rapidly growing, and the number of online attacks on the rise, cyber security’s set to become increasingly big business.
The attack on Marks & Spencer‘s digital infrastructure in April that’s crippled sales (and the company’s share price) underlines the growing importance of both businesses and individuals having proper protections in place.
Competition among the world’s software manufacturers is intense. So by buying an industry fund like the L&G Cyber Security ETF, investors can mitigate this threat by owning a basket of the sector’s largest and most innovative players.
This particular fund holds shares in 35 different companies including Crowdstrike, Cloudfare and Palo Alto. Its top-10 holdings comprise a cumulative 54.2% of the fund, meaning it’s not greatly exposed to any one operator.
While cyber security’s one of the more resilient tech segments, earnings can still fall during economic downturns when corporate spending declines. This could impact the performance of the fund if trade tariffs sap the world economy.
Yet I’m still optimistic this L&G product will provide strong returns over the long term. It’s delivered an average annual return of 11.9% during the last five years.
Fresnillo
Precious metals stocks like Fresnillo (LSE:FRES) have hit a roadbump more recently, reflecting falling demand for safe-haven assets. However, I think this trend of recent weeks will fizzle out, reinvigorating demand for flight-to-safety gold.
While fears of a full-blown trade war have reduced, the threat remains that trade tariffs will cause shockwaves for the global economy. Tension between superpowers (like the US and China) and trading blocs (like the EU) are meanwhile rumbling on in the background, and uncertainty over White House policy on trade and foreign policy abounds.
This provides fertile ground for gold and silver to rise again, which could be boosted by further weakness in the US dollar. Credit risks in the States continue to grow, weighing on the buck and making it more cost-effective to buy dollar-denominated assets.
Purchasing mining stocks does, on the downside, expose investors to the unpredicable business of metals exploration and production. Despite gold and silver price rises, profits can still splutter if costs balloon or output comes to a halt.
But major operators like Fresnillo also have the scale to better absorb such problems. This FTSE 100 operator has seven mines in operation across Mexico.
With a strong balance sheet — Fresnillo reported net cash of $458.3m at the end of December — it also plenty of scope to expand for growth and extra diversification.
