The Global X Cybersecurity ETF (ASX: BUGG) has spiked +8.2 per cent over the past six months as sovereign budgets integrate cyber security as essential infrastructure, outperforming the MSCI World Index (+3.8 per cent) and Nasdaq Composite (+2.5 per cent), according to Global X.
The key drivers of BUGG’s performance were its targeted exposure to high-conviction names, including CrowdStrike, Zscaler and Okta, companies that have notably posted double-digit gains over the year, while benefiting from increased global demand and cyber security spending.
Global X’s senior investment strategist, Billy Leung, highlighted cyber security exchange-traded funds (ETFs) are emerging as “standout beneficiaries” of NATO’s proposed hike in traditional military spending from 2 per cent to 3.5 per cent of gross domestic product, with an added 1.5 per cent for hybrid and digital threats.
“Cyber security remains one of the few sectors within global software that continues to deliver positive earnings revisions, supported by stable fundamentals and consistent demand,” Leung said.
“BUGG’s strategy to avoid broad mega-cap tech and focus on endpoint, identity, and zero trust frameworks has paid off.”
NATO’s 1.5 per cent earmarked spending for unorthodox threats such as cyber security, space and infrastructure protection has redefined how cyber security is classified and financed, while unlocking fresh investment flows into the sector.
According to Leung, this “reclassification is unleashing a significant pool of capital”.
“This surge in spending reflects the urgency of addressing modern threat landscapes.
“The non-discretionary nature of cyber security is driving consistent investment, shielding the sector from volatility affecting other technology verticals,” he added.
This, alongside NATO’s headline commitment, could potentially unlock over US$3 trillion in NATO-aligned defence investment by 2030, according to Global X.
Leung added: “We’re witnessing a shift from fragmented, discretionary spending to predictable, multi-year procurement cycles aligned with national security goals.”
Recent months have seen defence stocks, particularly in Europe, rally sharply, buoyed by elevated security concerns and extensive commitments to rearmament, resulting in defence ETFs flourishing both locally and globally.
Further, a shift in investor focus towards specialised cyber security plays has been observed as reported cyber attacks increased by 47 per cent on last year (according to Q1 2025 global data), prompting governments to prioritise long-term procurement.
This surge in cyber attacks equates to an average of 1,925 attacks per week.
In North America, ransomware attacks alone skyrocketed 126 per cent, while Australian super fund juggernauts AustralianSuper, Hostplus, Rest, and Australian Retirement Trust all came under attack in April, which saw financial losses for some members.
