Cybersecurity is becoming more costly and more critical. According to an IBM report, the average cost of a data breach has risen 10% over the past year to $4.88 million, the biggest one-year jump since before the COVID-19 pandemic.

A steady migration to cloud-based IT infrastructure and a hybrid workforce that spends significant time outside the office aren’t making security any easier. As a result, cybersecurity is a big and fast-growing industry.

That rising risk is fueling growth across the cybersecurity industry. But individual cybersecurity stocks can be volatile, and it’s not always clear which companies will emerge as long-term winners. For investors who want exposure without betting on a single name, cybersecurity exchange-traded funds (ETFs) offer a diversified way to invest in this expanding market.

The Amplify Cybersecurity ETF (HACK -0.60%) has been around since 2014 and has amassed $2 billion in assets. It is also rebalanced quarterly and has performed very well since its inception. Its annual expense ratio is 0.6%. The big difference between it and First Trust’s offering, though, is that the Amplify Cybersecurity ETF comprises just 23 stocks.

That means greater portfolio concentration in top names in the industry and fewer of the fund’s investments in smaller companies and international investments. There is significant overlap in the portfolios, as Broadcom is the Amplify fund’s largest holding.

3. Global X Cybersecurity ETF

Also launched in 2019, the iShares Cybersecurity and Tech ETF (IHAK -0.58%) comes from one of the largest financial institutions in the world: BlackRock (BLK -2.97%). It comprises 38 different cybersecurity company stocks and other tech companies involved in cybersecurity, and BlackRock charges a lower annual fee than many of its peers, at just 0.47%.

This ETF also isn’t the most security-focused around. While many of the large cybersecurity players are in the portfolio, it also includes a smattering of cloud computing names in security-adjacent niches.

5. WisdomTree Cybersecurity Fund

The WisdomTree Cybersecurity Fund (WCBR -0.61%) is the newest ETF on this list, with an inception date of January 2021. While the company has accumulated only $120 million in assets so far, it offers a competitively priced product with annual fees of only 0.45%.

This ETF is one of the most concentrated funds here, with just 25 cybersecurity stocks. CrowdStrike is the largest position, while Datadog (DDOG -0.28%) and Cyberark Software (NASDAQ:CYBR) round out the top three. The stocks within this ETF are rebalanced twice a year.

Vanguard, whose founder Jack Bogle invented the index fund in 1976, doesn’t have a dedicated ETF focused on cybersecurity. However, the Vanguard Information Technology ETF (VGT -1.96%) is worth mentioning. It is a broad-based index of the U.S. technology sector and is full of cybersecurity companies and other large businesses involved in security in some form.

With an annual expense ratio of just 0.09% and about 320 total holdings, the Vanguard Information Technology ETF is a great way for investors to get passive exposure to the development of cybersecurity, along with other growth trends in technology, such as cloud computing and semiconductor designers. The fund has been around since 2004 and has averaged 13.8% annually in total returns.

7. Xtrackers Cybersecurity Select Equity ETF

Cybersecurity is a long-term investment

With computing technology infiltrating every corner of the global economy, cybersecurity is poised to be one of the most important secular growth trends of the next decade and beyond.

Individual stocks that develop security technology services will be volatile, but investing in a basket of them could yield big returns over the long term. An ETF is a quick and easy way to gain investment portfolio exposure to this critical segment of the tech sector.