SPAM ETF Holds 36 Cybersecurity Stocks But Can’t Beat the Market

When ransomware attacks hit the headlines and data breaches dominate the news cycle, cybersecurity stocks tend to rally. But what happens when the threat landscape is always evolving, and investors want exposure without picking individual winners? Themes Cybersecurity ETF (NYSEARCA:SPAM) attempts to answer that question by bundling dozens of cybersecurity names into a single ticker.

Built for Thematic Exposure, Not Income

SPAM is designed for investors who want concentrated exposure to the cybersecurity sector without the homework of analyzing individual companies. Launched in December 2023, the fund holds a portfolio weighted heavily toward information technology at 65%, with a smaller allocation to industrials. The return engine here is straightforward: appreciation of the underlying cybersecurity businesses as enterprise spending on digital defenses continues to grow.

The fund spreads exposure across 36 holdings, with no single position dominating the portfolio. Akamai Technologies (NASDAQ:AKAM | AKAM Price Prediction) represents the largest stake at 6%, followed by positions in Qualys (NASDAQ:QLYS) and CACI International (NYSE:CACI). This diversification reduces the risk that any one company’s struggles will derail the fund, but it also means exceptional performance from a single holding won’t significantly boost returns. Established names like CrowdStrike (NASDAQ:CRWD) round out the portfolio alongside smaller players.

The fund charges a 0.35% expense ratio, positioning it in the middle tier for thematic ETFs. This fee structure reflects the specialized nature of cybersecurity exposure, though investors should weigh whether the concentrated sector bet justifies the cost compared to broader technology funds. With just $2.4 million in assets under management, the fund remains small, which can create trading friction for larger positions.

Returns Have Lagged the Broader Market

Since its December 2023 launch, SPAM has gained roughly 19.4%, but that return pales against the broader market’s advance. The S&P 500 delivered nearly four times that performance over the same window, highlighting how sector concentration can work against investors when the theme falls out of favor. More recently, the gap has widened further as cybersecurity stocks face headwinds while the broader market continues climbing.

The underperformance reflects broader sector headwinds. Even top holdings like CrowdStrike have struggled with double-digit declines year to date, while Palo Alto Networks (NASDAQ:PANW) has also posted losses. When cybersecurity stocks struggle, a concentrated sector ETF amplifies that pain.

The Tradeoffs You Accept

First, you’re accepting sector concentration risk. When cybersecurity underperforms, there’s no diversification cushion. Second, the fund’s small asset base raises liquidity concerns and increases the risk of closure. Third, you’re paying for active thematic exposure without any income generation, which limits its appeal for total return or income-focused portfolios.

SPAM works best for investors who believe cybersecurity spending will accelerate and want diversified sector exposure, but recent performance suggests patience will be required.