What Explains Cybersecurity ETF WCBR’s Returns? | ETF Trends

ETF data comes thick and fast every week, but when a signal emerges from the noise, it’s time to listen. The WisdomTree Cybersecurity ETF (WCBR) has returned 4.3% over the last week according to VettaFi on top of a 14.6% return over the last month. With those numbers, WBCR outperformed every other ETF offered by WisdomTree Investments in those time frames. Those robust returns have become a signal worth examining in a somewhat surprising area of investing.

WBCR tracks the WisdomTree Team8 Cybersecurity Index, investing in developed market firms involved in tech security. WCBR starts with about 25 names that pull at least 50% of revenue from cybersecurity with more than 7% growth over three years. The cybersecurity ETF then scores each stock on two factors, revenue growth and focus on the theme. It then overweights high scorers.

SentinelOne (S) stands out as a classic example, an American cybersecurity firm founded just 10 years ago. WCBR weights it at 6.3%, just behind the ever-present tech stock Datadog (DDOG). Interestingly, DDOG does not specifically work in cybersecurity like S but instead focuses on cloud and server tools and services.

That suggests that some of the ETF’s strength has come from diversification as much as in its cybersecurity presence. It also holds cybersecurity-specific names like Fortinet (FTNT) and Crowdstrike (CRWD). The focus in that area makes some sense amid an increase in ransomware cases impacting organizations from private companies to school districts. CRWD and others may also be benefitting from the overall AI boost the tech space has reaped lately.

In some ways, cybersecurity naturally grows in tandem with overall tech growth, with mega-cap tech successful this year. Interestingly, WBCR still has some time to go before hitting its three-year mark. WCBR launched back in 2021, charging 45 basis points. It so far has gathered $30 million in AUM, adding $1 million over the last month thanks entirely to price influence.

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