Cyber Security ... From Risk to Opportunity

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CYBER SECURITY: A MUST FOR YOUR PORTFOLIO?
From risk to opportunity

By Allianz Global Investors (as of July 2025)



Some 20 billion devices are now connected to the Internet, and the figure is still growing exponentially.
In the time it takes you to read this sentence (about four seconds), cyber criminals will have carried out around 27,780 attacks. There are almost 7000 attacks per second worldwide, happening 24 hours a day, 365 days a year. The good news?

This situation presents an investment opportunity...

• Twenty years ago it was possible to avoid the Internet if you wanted to, something that is inconceivable today. We meet online, manage our finances via an app, store photos in the cloud and control thermostats remotely. This digital connectivity makes our lives easy and efficient, but we are also more vulnerable than ever. Not only in our personal lives, but also at work. According to a report from Microsoft, there are no fewer than 600 million cyber attacks worldwide every day¹.
• It is therefore no coincidence that the Allianz Risk Barometer 2025² has named cyber incidents as the most important global business risk for the third successive year. The potential damage is not only financial – there is also a risk of reputational damage, legal liability, production downtime and even compromised national security.

Sources:
¹: news.microsoft.com/en-cee/2024/11/29/microsoft-digital-defense-report-600-million-cyberattacks-per-day-around-the-globe/ 
²: commercial.allianz.com/content/dam/onemarketing/commercial/commercial/reports/Allianz-Risk-Barometer-2025.pdf

From the railway to supermarkets
Hospitals, water treatment plants, public services, steel plants, car manufacturers, railway operators … no sector is safe from the growing prevalence of cyber crime. In Q2 this year, a cyber attack cost the UK Retailer M&S an estimated GBP 300 million, almost a third of its total annual profits. The attack forced the company to resort to pen and paper, among other measures, because its automated stock systems were crippled.

As cyber crime grows, so too does cyber security.
As the threats increase, the cyber security sector is booming like never before. According to McKinsey, around USD 200 billion was spent worldwide in 2024 on products and services to protect digital networks³. The figure has been increasing for a number of years now, and that doesn’t look like changing any time soon, with McKinsey anticipating annual growth of some 12% over the coming years.

Various developments reinforce this trend

1. Digitalisation and connectivity: Society is increasingly online. Smart devices in our homes, driver assistance technology in our cars, cloud services and mobile networks connect everything and everyone. Some 20 billion devices are now connected to the Internet, and the figure is still growing exponentially⁴. Every connected device can be a gateway to cyber criminals, from a simple printer to a sophisticated industrial robot.
2. Geopolitical tensions: The tensions playing out between countries are increasingly moving to the cyber space environment. Last year in Belgium, the FOD Economie website and, notably, the website of the Centre for Cybersecurity were crippled by an attack believed to stem from a Russian group. Attacks and espionage cost money every day, making cyber security a strategic priority for countries and businesses. This digital warfare often goes beyond just taking a website offline, with targeted attacks on critical infrastructure and intellectual property.
3. Advent of new technology: Artificial Intelligence (AI) and automation are changing the playing field. While cyber criminals use AI to carry out even more sophisticated attacks (e.g. deep-fake phishing or automated ransomware), security companies are using it to automate repetitive tasks. Employees are also increasingly being trained to cope with more complex and costly cyber threats.
4. Regulatory and compliance: Governments are imposing increa- singly stringent regulations, such as privacy laws and guidelines that obligate organisations to report vulnerabilities and implement robust security measures. These rules are forcing organisations, ranging from financial institutions to public utilities, to invest millions in digital security every year.

This mix of digitalisation, the geopolitical situation, technological revolution and regulatory frameworks means there is a constant structural demand for cyber security. Companies and organisations must constantly create new lines of defence. This makes cyber security a self-reinforcing growth market: The challenges are increasing, the solutions are becoming more complex, and investment is rising accordingly.
Sources: ³: https://www.mckinsey.com/capabilities/risk-and-resilience/our-insights/the-cybersecurity-providers-next-opportunity-making-ai-safer | ⁴: iot-analytics.com/number-connected-iot-devices/ 

FIVE LINES OF DEFENCE

1. Perimeter security: Firewalls, threat detection and access control
2. Network security: Protection of internal data traffic
3. Endpoint security: Protection of devices such as laptops, smartphones or sensors
4. Application security: Protection of apps and their underlying code
5. Data security: Encryption, access control and detection of unauthorised access

Allianz Cyber Security Fund

• Allianz Cyber Security (the "Fund") is adapting to this evolution with a global portfolio of 30 to 60 carefully selected companies operating in all spheres of cyber security. The emphasis is on pure plays – com- panies for whom cyber security is not a secondary activity, but a high priority. The selection process is based on a dedicated, clearly defined universe of more than 200 listed companies. Only companies that are found to be sufficiently relevant or even as “pure” players after thorough examination are considered.
• The portfolio contains a mix of promising growth stocks and established stocks, with a preference for mid-sized companies with a strong technological edge. The portfolio is managed by Voya IM as the delegated administrator – based in San Francisco near Silicon Valley. With more than 20 years of experience, the team has built up a unique level of expertise with cyber security stocks and has one of the longest track records in the sector.

Agentic AI  

• “One of the developments we are following closely is the emergence of agentic AI. This is the new generation of AI that can make independent decisions and manage complex workflows”, says Fund Manager Erik Swords. “The technology provides huge efficiency gains for businesses but does also increase the complexity of security. AI agents use real-time data, connect systems independently, and work with minimal human intervention. Cyber security is crucial here, because any weak link can be a target. We believe that the importan- ce of identity management, among other things, will increase as a result, and this is reflected in our positioning within the Fund.”
• Although the mix of digitalisation, the geopolitical situation, technological revolution and regulatory frameworks means there is a constant structural demand for cyber security, it goes without saying that this topic is not evolving in a straight line upwards on the market; losses are possible and the potential of other opportunities can be overlooked by focusing solely on this topic.

Materials/information sourced from Allianz Global Investors; all copyrights are reserved to Allianz Global Investors; Allianz Global Investors accepts no responsibility or liability for any use or reliance on the information.

Recommended Fund by Krungsri Asset Management:
KFCYBER-A … An Investment Opportunity in the Growth of Cyber Security

• The fund invests in the master fund, Allianz Global Investors Fund – Allianz Cyber Security, managed by Allianz Global Investors GmbH, with an average allocation of not less than 80% of NAV per accounting year. The master fund seeks to invest globally in equities of companies engaged in or benefiting from businesses related to cyber security.
• Risk Level: 6 – High Risk | Minimum Investment: THB 500

Remarks:

• Allianz Global Investors and Voya Investment Management entered into a long-term strategic partnership on 25 July 2022, upon which the investment team transferred to Voya Investment Management. This did not materially change the composition of the team, the investment philosophy nor the investment process. Management Company: Allianz Global Investors GmbH. Delegated Manager: Voya Investment Management Co. LLC (“Voya IM”).
• The information presented here is intended for general circulation and does not constitute a recommendation to anyone; it also has not taken into account the specific investment objectives, financial situation or particular needs of any particular person. Information herein is based on sources we believe to be accurate and reliable as at the date it was made. We reserve the right to revise any information herein at any time without notice. No offer or solicitation to buy or sell securities and no investment advice or recommendation is made herein. In making investment decisions, investors should not rely solely on this advertisement but should seek independent professional advice. However, if you choose not to seek professional advice, you should consider the suitability of the product for yourself. Past performance of the fund manager(s) and the fund is not indicative of future performance. Prices of units in the Fund and the income from them, if any, may fall as well as rise and cannot be guaranteed. Distribution payments of the Fund, where applicable, may at the sole discretion of the Manager, be made out of either income and/or net capital gains or capital of the Fund. As a result of the payment, the Fund’s net asset value is expected to be immediately reduced. The dividend yields and payouts are not guaranteed and might change depending on the market conditions or at the Manager’s discretion; past payout yields and payments do not represent future payout yields and payments. Investment involves risks including the possible loss of principal amount invested and risks associated with investment in emerging and less developed markets. The Fund may invest in financial derivative instruments and/or structured products and be subject to various risks (including counterparty, liquidity, credit and market risks etc.). Past performance, or any prediction, projection or forecast, is not indicative of future performance. Investors should read the Prospectus obtainable from Allianz Global Investors Singapore Limited or any of its appointed distributors for further details including the risk factors, before investing. The duplication, publication, extraction, or transmission of the contents, irrespective of the form is not permitted, except for the case of explicit permission by Allianz Global Investors. This advertisement has not been reviewed by the Monetary Authority of Singapore (MAS). MAS authorization/recognition is not a recommendation or endorsement. The issuer of this advertisement is Allianz Global Investors Singapore Limited (79 Robinson Road, #09-03, Singapore 068897, Company Registration No. 199907169Z).

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