3 Cybersecurity ETFs in Focus Amid Reports of US Cyber Operations Suspension

Cybersecurity-focused ETFs are back in the spotlight following a report by The Record that U.S. Defense Secretary Pete Hegseth ordered a halt to offensive cyber and information operations against Russia.

The Pentagon denied these claims. Still, the news has reignited interest in cybersecurity investments. As cyber threats escalate, organizations worldwide are ramping up efforts to protect their digital assets, making cybersecurity companies and ETFs holding them, attractive investment opportunities.

For investors looking to gain diversified exposure to the cybersecurity sector without the hassle of studying and choosing individual stocks, here are three noteworthy cybersecurity ETFs:

• Global X Cybersecurity ETF (NASDAQ:BUG): This ETF provides investors access to a portfolio of 22 cybersecurity companies. It includes leading firms like Palo Alto Networks (NASDAQ:PANW), Zscaler (NASDAQ:ZS), Fortinet (NASDAQ:FTT), and CrowdStrike (NASDAQ:CRWD). While the ETF primarily focuses on U.S.-based companies, it also includes firms from Israel, Japan, and South Korea. It has an expense ratio of 0.5%, which is relatively standard for sector-specific ETFs.

• First Trust Nasdaq Cybersecurity ETF (NASDAQ:CIBR): This fund tracks the Nasdaq CTA Cybersecurity Index and includes companies actively involved in cybersecurity operations. CrowdStrike is one of its major holdings, along with other key players such as Check Point Software (NASDAQ:CHKP), Fortinet, and Palo Alto. CIBR has over $8 billion in assets under management and an expense ratio of 0.6%.

• ETFMG Prime Cyber Security ETF (NYSE:HACK): The first ETF focused on cybersecurity and remains one of the most popular choices among investors. It provides exposure to a mix of established cybersecurity companies and emerging players. Its holdings include CrowdStrike, Palo Alto Networks, and Cisco (NASDAQ:CSCO), among others.

HACK follows a tiered, equal-weighted approach, ensuring that no single company dominates the portfolio. This diversification helps mitigate risk while still capturing growth potential in the cybersecurity industry. The fund has an expense ratio of 0.6% and has consistently performed well as cyber threats continue to increase globally.

Also Read: 3 ETFs For Cybersecurity Investors As AI-Driven Threats Grow

The Growing Importance Of Cybersecurity

The increasing reliance on digital infrastructure across industries has made businesses, governments, and individuals more vulnerable to cyberattacks. High-profile breaches targeting financial institutions, healthcare providers, and government agencies have demonstrated the critical need for robust cybersecurity measures.

Companies are now investing heavily in AI-driven security solutions, zero-trust architectures, and threat intelligence platforms to stay ahead of evolving threats. As a result, cybersecurity firms are experiencing strong revenue growth, making them attractive investment opportunities.

According to a Bloomberg Intelligence research report, the total cybersecurity market will likely hit $338 billion by 2033. That’s up from about $152.5 billion in 2023.

Cybersecurity has become one of the fastest-growing sectors in the market. High-profile cyberattacks in recent years have led to massive data breaches, infrastructure failures, and financial losses amounting to billions of dollars.

According to a research report by CrowdStrike:

• China-linked cyber activity rising by 150% across all sectors in 2024.
• Vishing attacks experienced an explosive 442% increase between the first and second half of the year.
• The fastest recorded eCrime breakout time was just 51 seconds, emphasizing the speed at which cybercriminals can compromise systems.
• 79% of detected cyber incidents were malware-free, indicating a shift toward advanced attack techniques.
• 26 newly named adversaries emerged
• 52% of vulnerabilities identified were linked to initial access methods, underscoring the ongoing challenge of securing entry points against persistent cyber threats.

As cyber threats continue to evolve, businesses and governments are prioritizing investments in cybersecurity to safeguard their networks and data. This growing demand positions cybersecurity ETFs and companies for sustained long-term growth.

See Also: Bybit Founder Confirms $1.4 Billion Ethereum Hack, Blames ‘Masked’ Transaction

Renewed Interest Fueled By Stalled Cyber Operations

Hegseth’s move was reportedly aimed at fostering diplomatic talks between the U.S. and Russia regarding Ukraine.

U.S. cyber operations against Russia have historically included disrupting ransomware groups, countering disinformation campaigns, and targeting networks used by Russian intelligence agencies. These operations have played a critical role in reducing cyber threats that could impact American infrastructure, financial institutions, and national security. A halt or pause in such actions could enable Russian state-backed hackers and cybercriminal groups to escalate their activities against U.S. and European targets.

According to a New York Times report, former intelligence officials have noted that pauses in military and cyber operations during sensitive diplomatic negotiations are not uncommon, as they can prevent tensions from escalating further.

Critics argue that scaling back offensive cyber capabilities, even temporarily, risks weakening U.S. deterrence and response mechanisms.

Regardless of the conflicting narratives, cybersecurity remains a critical national security and business priority. The alleged pause in U.S. cyber operations against Russia has raised concerns about potential vulnerabilities, further underscoring the need for robust cybersecurity solutions.

Read Next:

• Broken Deal, Big Consequences: How ETFs And Stocks Will React

Photo: Shutterstock