As interest rates rise and the economy slows, already hard-hit tech stocks are likely to struggle. But one niche can thrive—cybersecurity hardware and software firms. Nearly 70% of organizations are expected to increase their cybersecurity spending in 2022, and the industry should reach an estimated $352 billion by 2026, growing 15% a year. Reasons: Private corporations are ramping up their defenses after President Biden warned that Russia may launch cyberattacks in the US to retaliate for economic sanctions…and the new hybrid workplace is a hacker’s dream with a mix of office and remote devices accessing company networks. The best way to gain exposure to cybersecurity stocks, which can be volatile, is through a diversified exchange-traded fund (ETF). Worth considering now…

First Trust Nasdaq Cybersecurity ETF (CIBR), with $6.3 billion in assets, holds 41 stocks including some in adjacent industries, such as aerospace and defense. Annualized five-year performance: 18%.

ETFMG Prime Cyber Security ETF (HACK). Started in 2014, this is the oldest in the category with the broadest diversification. It holds 67 stocks including large-cap, small-cap and international companies. It exhibits less volatility than its peers, and its holdings have lower overall valuations. Annualized five-year performance: 13.2%.

Global X Cybersecurity ETF (BUG), launched in October 2019, is the most aggressive and heavily concentrated with 31 stocks and 60% of assets in its top 10 holdings. It requires the companies it invests in to generate at least 50% of revenues from cybersecurity. Annualized performance since inception: 29.4%.

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