Cybersecurity ETFs are rallying while AI stocks cool off

Many top cybersecurity firms experienced noteworthy rallies throughout Q2 2026, a welcome shift after a period of stagnation for much of the last year up until that time. Companies may be navigating AI upheaval more successfully-Anthropic's Project Glasswing appears to be a model for how traditional cybersecurity companies can partner with AI providers in a mutually beneficial way.

On top of this, earnings across the industry have picked up, the result of increased opportunities for attacks on cloud operations and other market-wide vulnerabilities. The takeaway for many investors is that the second half of 2026 could be an opportunity for cybersecurity companies to further distinguish themselves, with various sub-sectors proving ripe for growth and share prices across the sector showing resilience even while a broader AI sell-off has dampened results elsewhere. Cybersecurity exchange-traded funds (ETFs) can help to capture this momentum.

A (Relatively) Low-Cost Way of Drilling Down on Cybersecurity Names

With returns of more than 35% year to date (YTD), the WisdomTree Cybersecurity Fund (NASDAQ: WCBR) is an information technology fund with a specific focus on companies involved in the cybersecurity space. Its basket is fairly narrow, as the fund holds only 33 positions. However, even the largest allocation-to industry leader CrowdStrike Holdings Inc. (NASDAQ: CRWD)-is only about 7.7%. This makes the basket a way to gain access to a moderately evenly-weighted collection of the biggest and most successful global cybersecurity companies trading today.

WCBR is not the largest cybersecurity ETF by any means. Indeed, its $111 million in managed assets and similarly modest trading volume suggest that many investors overlook this fund. Still, with an expense ratio of 0.45%, this is actually one of the most modestly priced funds in this thematic area. On top of that, its performance is on par with, or even better than, that of other funds with higher annual fees.

The Original Cybersecurity ETF Remains Competitive

With more than 11 years of trading history, the Amplify Cybersecurity ETF (NYSEARCA: HACK) is the oldest cybersecurity-focused fund currently available to domestic investors. As a sign of this fund's longevity, it has one of the largest asset bases of any ETF in a similar theme, although at $2.8 billion, its assets under management remain quite modest compared to many larger funds in the broader ETF universe. This ETF also has an average trading volume about five times that of WCBR, which may increase its appeal to investors looking for stability and liquidity.

In other respects, though, HACK is more difficult to distinguish from its newer, smaller peer. For one thing, it has a similarly sized portfolio that has 25 distinct holdings from the U.S. market. Within this basket, individual positions represent as much as about 6.5% of the total portfolio, and investors will not be surprised to see many of the same stocks atop HACK's list as well as WCBR's.

In terms of performance, HACK has also been fairly competitive with WCBR as well, returning 34% YTD. One larger distinction, however, is the annual fee: HACK's expense ratio is considerably higher than WCBR's at 0.60%. For investors, it may come down to whether an extra 15 basis points in yearly fees is worth the convenience that potentially greater liquidity brings.

A Standout Fund Popular With Traders

The Global X Cybersecurity ETF (NASDAQ: BUG) is a third option for investors seeking concentrated exposure to the cybersecurity industry through ETFs. BUG stands out as far and away the most actively traded of these funds, with an average trading volume several times that of HACK, despite having only about half the assets under management.

This is interesting not only because of BUG's modest asset base, but also because the fund has an expense ratio of 0.50%, which is lower than HACK's but still higher than WCBR's. Perhaps a reason that this ETF appeals is that it provides exposure to a somewhat broader list of companies, with 32 total holdings across developed markets. While HACK dedicates about two-thirds of its invested assets to large-cap stocks, BUG provides a somewhat more well-rounded approach, allocating only about 52% to large caps. A sizable portion of the ETF focuses on smaller companies, providing attractive diversification.

BUG's performance history in 2026 is not quite the same as either of the funds above, but with YTD returns of 29%, it is not far behind and remains well above the broader market. The appeal of this particular ETF, then, may lie in its high trading volume and capacity to provide somewhat more diversified access to a fast-growing industry.

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