How Cybersecurity ETFs Are Reshaping Investment Portfolios in 2025

The digital threat landscape continues to expand at an alarming pace. With cyberattacks and data breaches becoming increasingly sophisticated, investors are discovering cybersecurity ETFs as a strategic way to capitalize on this growing sector. These exchange-traded funds offer a practical entry point into cybersecurity investing without requiring deep technical expertise or massive capital commitments.

The stakes have never been higher. According to IBM’s 2024 research, organizations worldwide now face an average data breach cost of US$4.48 million—a 10 percent surge from the previous year and the most significant figure recorded over the past two decades. These rising expenses, combined with accelerating cyber incidents globally, have pushed cybersecurity to the forefront of corporate spending priorities. Market forecasts through 2030 remain robust, driven by emerging threats from artificial intelligence and quantum computing technologies.

Why Cybersecurity ETFs Stand Out

Investing in cybersecurity ETFs presents distinct advantages over individual stock picking. These funds bundle together multiple security-focused companies, enabling investors to spread exposure across the sector rather than betting on single players. The fee structure typically favors ETFs as well—they generally charge lower expense ratios compared to actively managed mutual funds or similar investment vehicles.

The cybersecurity ETF marketplace has matured considerably. As of early 2025, over nine cybersecurity-focused ETFs were trading on U.S. exchanges. What follows is an in-depth look at four market leaders by assets under management (AUM), all exceeding US$500 million in total holdings.

NASDAQ-Listed Giant: First Trust NASDAQ Cybersecurity ETF (CIBR)

Launched in mid-2015, this ETF has grown into a heavyweight player, managing approximately US$7.08 billion in assets. The fund maintains a 0.6 percent expense ratio and tracks the NASDAQ CTA Cybersecurity Index, holding 33 securities across its portfolio.

The index methodology casts a deliberately wide net, capturing technology companies designated as cybersecurity by the Consumer Technology Association, while also incorporating pockets of exposure to defense and aerospace firms. Key positions within the fund include Broadcom at roughly 11 percent weighting, Infosys at over 8 percent, CrowdStrike Holdings representing approximately 8 percent of holdings, and Cisco Systems at nearly 8 percent. This diversified holding structure reflects the breadth of the modern cybersecurity ecosystem.

The Oldest Player: ETFMG Prime Cyber Security ETF (HACK)

Trading since late 2014, this ETF predates most competitors on this list and manages approximately US$1.81 billion. Operated by ETFMG—a smaller fund manager distinct from the industry’s household names—HACK has delivered a 12.19 percent annualized return over the past five years, demonstrating solid performance despite its lower profile.

The fund tracks the ISE Cyber Security Index and maintains 27 holdings with a matching 0.6 percent expense ratio. Major positions feature Broadcom again at 13.87 percent, Cisco at 7.18 percent, CrowdStrike at 5.62 percent, and Palo Alto Networks representing 5.45 percent of the portfolio. The higher concentration in individual stocks compared to competitors reflects a more focused investment approach.

Global Approach: iShares Cybersecurity and Tech ETF (IHAK)

Established in mid-2019, this iShares product manages US$921.99 million and charges a lower 0.47 percent expense ratio. The fund tracks the NYSE FactSet Global Cyber Security Index, deliberately incorporating both developed and emerging market cybersecurity companies into its framework.

With 37 total holdings, IHAK provides broader diversification. Notable positions include CyberArk Software at 4.45 percent, Accton Technology at 4.44 percent, Juniper Networks at 4.39 percent, and Okta at 4.17 percent. The relatively even weighting across holdings suggests a more systematic approach to fund construction compared to market-cap-weighted alternatives.

Market Cap Focus: GlobalX Cybersecurity ETF (BUG)

The newest member of this quartet launched in October 2019 and oversees US$786.78 million in assets with a 0.51 percent expense ratio. GlobalX’s methodology applies a unique filter—companies must derive at least 50 percent of revenues from cybersecurity activities to gain inclusion in the underlying market-cap-weighted index.

This stringent revenue threshold creates a more pure-play cybersecurity exposure. The fund holds 22 positions, led by Fortinet at 6.92 percent, CrowdStrike at 6.87 percent, Check Point Software Technologies at 5.95 percent, and Zscaler at 5.77 percent. The smaller holdings count reflects both the stricter inclusion criteria and the more concentrated nature of dedicated cybersecurity vendors.

Evaluating Your Cybersecurity ETF Options

When comparing these cybersecurity ETFs, several factors deserve consideration. Fee structures range from 0.47 to 0.6 percent, with iShares offering the lowest-cost option. Asset bases vary considerably, with CIBR commanding nearly four times the AUM of the smallest fund. Composition philosophies differ as well—some emphasize breadth across 30+ holdings, while others pursue tighter, more focused portfolios.

The cybersecurity ETF landscape provides investors with multiple avenues to participate in a sector defined by persistent tailwinds. Whether prioritizing low fees, geographic diversification, or concentrated bets on pure-play vendors, today’s cybersecurity ETF options accommodate different investment philosophies and risk tolerances.