Cyber security has cemented itself as a structural investment theme, with global spending forecast to climb up to US$377 billion by 2028, with specialist exchange-traded funds (ETFs) delivering strong returns, according to ETF provider Betashares.
Speaking to InvestorDaily, investment strategist at Betashares, Hugh Lam, said demand for security solutions has accelerated as geopolitical tensions and AI advancements reshape the risk landscape.
“Cyber security remains a strong, structural investment thematic as ongoing geopolitical tensions creates a backdrop of uncertainty among businesses, government and individuals all across the world,” Lam said.
“This has only been accelerated by advancements in AI technologies which are then exploited by adversaries to attack critical network systems and networks.
“Together, these developments have driven global security spending higher over recent years and is forecast to reach US$377 billion in 2028 – an amount which is not only large in magnitude but is highly defensible in nature.”
Betashares stated that its Global Cybersecurity ETF (ASX: HACK) has returned 28.8 per cent over the year to 31 August 2025, highlighting investor appetite for the sector and its resilience when compared to broader equity markets.
Moreover, industry dynamics are also being altered by a wave of merger and acquisition activity, with larger global players seeking to consolidate their positions through the acquisitions of smaller, more specialised firms.
At the same time, private equity investors have been circling the sector with record levels of capital waiting to be deployed.
Lam pointed out that private equity firms have an estimated US$2.62 trillion in “dry powder” available, much of which could find its way into technology and security-linked investments.
“Finally, the cyber security theme remains supported by rising national defence budgets, reflecting its importance in modern warfare and national security,” Lam said.
“For example, the US National Defence Authorization Act (NDAA) has allocated approximately US$30 billion to cyber security initiatives in FY2025.
“And as part of NATO’s total defence spending target of 5 per cent, 1.5 per cent of that would be related to ‘defence-related outlays’ which includes spending on cyber security.”
The sector’s momentum has unfolded against a broader backdrop of strong performance for defence-related investments.
Recently, Global X’s Defence Tech ETF emerged as one of the best-performing funds in 2025, buoyed by surging military spending and the success of companies such as Palantir.
Analysts noted that heightened geopolitical risks, from conflicts in Europe to tensions across the Asia-Pacific, have been a key driver of institutional inflows into defence and security strategies.
In this context, cyber security is increasingly regarded not just as a corporate necessity but as a national security priority.
With governments, businesses and investors aligned on its strategic importance, the sector continues to attract capital and deliver strong results for investors seeking both growth and protection in volatile markets.
