Core Viewpoint - The Global X Cybersecurity ETF (NASDAQ:BUG) has underperformed in 2025 despite a strong underlying cybersecurity thesis, primarily due to heightened investor expectations for flawless performance from high-growth software companies [2][3]. Group 1: Market Dynamics - Cybersecurity stocks are currently facing a "Perfection Regime," where investors expect impeccable execution despite strong fundamentals and increasing cyber threats [5]. - The emergence of AI-enabled agentic attacks is identified as a significant new frontier in cyber threats, leading to accelerated enterprise security spending [4]. Group 2: ETF Composition and Holdings - BUG has a concentrated portfolio with significant holdings in CrowdStrike (NASDAQ:CRWD), Palo Alto Networks (NASDAQ:PANW), Fortinet (NASDAQ:FTNT), and Check Point Software (NASDAQ:CHKP), with 81.6% of its investments in Information Technology [5]. - The ETF's equal-weight approach allows underperforming stocks to potentially catch up in 2026 if the sector experiences a rotation [6]. Group 3: Future Performance Indicators - Key indicators for 2026 performance include enterprise IT budget announcements and security spending commitments, typically revealed in January and February earnings calls [7]. - Monitoring the execution quality of BUG's holdings is crucial, as companies must deliver on billings, guidance, and customer growth without any setbacks [7].