First Trust NASDAQ Cybersecurity ETF Outpaces S&P Over Decade, Down 12% YTD
Over the past decade, First Trust’s NASDAQ Cybersecurity ETF returned 311% versus SPY’s 246%, but it's down 12% YTD due to valuation compression in top names like CrowdStrike and Palo Alto Networks. The $10.6 billion ETF holds 31 firms and charges a 0.58% expense ratio.
1. Performance Overview
Since its inception, the ETF has delivered a 311% gain over ten years compared to SPY’s 246%, underscoring strong secular growth in enterprise security budgets. However, five-year performance of 52% lags SPY’s 80%, and the fund has fallen 12% year to date amid broad tech retrenchment.
2. Portfolio Composition and Costs
The ETF tracks the Nasdaq CTA Cybersecurity Index with $10.6 billion in assets under management. It allocates across 31 cybersecurity-related firms, including pure-play names like CrowdStrike and Palo Alto Networks as well as infrastructure giants Cisco and Broadcom, and carries a 0.58% expense ratio.
3. Underperformance Drivers
Valuation compression in high-growth security stocks and concentration risk in top holdings have weighed on recent returns, despite accelerating cybersecurity spending driven by AI-related threats. The fund’s negligible 0.94% dividend yield reflects its growth-oriented strategy without leverage or income overlays.