This group of stocks offers a ‘trade war shield,’ says BCA Research

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This group of stocks offers a ‘trade war shield,’ says BCA Research

Investors seeking safety from current trade war volatility might consider betting on cybersecurity stocks, according to BCA Research. Uncertainty stemming from the Trump administration’s tariff rollout has roiled markets in recent weeks, sending the S & P 500 down nearly 20% its all-time high reached in February at one point. But promises of easing trade tensions sent the benchmark back up 13% since April 8, and it is now down just 5% on the year. Still, a lack of progress signs has left many investors hesitant to trust the mid-April rebound. In a recent note, BCA Research offered a solution to investors looking for a volatility hedge: cybersecurity stocks. “It is a domestically focused service industry that offers a more defensive profile and a lower market beta than the rest of the tech sector,” wrote chief strategist Irene Tunkel. “It is less exposed to tariffs than other industries and, if anything, benefits from geopolitical tensions as customers seek protection from international cyberattacks and cybercrime.” BUG YTD mountain BUG year to date Going forward, the long-term investment thesis for the industry remains intact due to cyberattacks rising in frequency and sophistication. The increasing adoption of generative AI, machine learning and quantum computing should also contribute to more necessary comprehensive cyber defense solutions, Tunkel added. Cybersecurity — which Tunkel called a “trade war shield” — remains relatively tariff-proof since it is a predominantly service industry. Fundamentals have also been improving, since companies have been shifting their focus from capital expenditures spending to placing more emphasis on increasing their bottom-line efficiency and profitability. Tunkel added that a recent pullback means that valuations have compressed to more reasonable levels, opening up an attractive entry point for investors. While Tunkel did not highlight specific stocks, she pointed to three ETFS that provide exposure to the cybersecurity space: First Trust NASDAQ Cybersecurity ETF (CIBR) : up 6% year to date, outpacing the S & P 500. The fund charges 0.59% in fees and has $8.5 billion in assets. Global X Cybersecurity ETF (BUG) : up 6% in 2025; has an expense ratio of 0.51%. The fund has $1.05 billion in assets. Amplify Cybersecurity ETF (HACK) : 2% higher this year; charges 0.6% in fees. The fund has nearly $2 billion in assets.

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