The Global X Cybersecurity ETF (BUG) tracks the Indxx Cybersecurity Index, providing investors with a focused "pure-play" approach to the digital security sector. By requiring holdings to derive at least 50% of their revenue from cybersecurity activities, the fund eliminates the diluted exposure often found in broader tech indices. Institutional and retail investors typically choose BUG for its modified market-cap weighting scheme (typically capping holdings at 6%) to balance dominant industry leaders like Palo Alto Networks and CrowdStrike with high-growth emerging firms.
However, for long-term Indian investors, BUG carries a critical structural risk: The US Estate Tax. If you hold US-domiciled assets (like BUG) and your portfolio value exceeds $60,000, the US government levies a 40% Estate Tax on the excess amount upon your death. This creates an unnecessary risk that can wipe out nearly half of the wealth intended for your heirs.
This blog gives you all the information you need about the top UCITS alternatives. While the first option listed below is the exact European "twin" of BUG tracking the identical index, others track different benchmarks like the STOXX Global Digital Security Index or use expert-led methodologies. These alternatives provide similar high-growth exposure to the cybersecurity sector without the estate tax risk.
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Why Indians are looking for UCITS alternatives to BUG
Indian investors are shifting to UCITS alternatives because they solve the tax risks and inefficiencies of US ETFs like BUG while providing the exact same exposure.
- Estate Tax Protection: UCITS funds are typically domiciled in Ireland. They are not considered "US-situs" assets, meaning they are 100% exempt from the 40% US Estate Tax.
- Tax Deferral (Accumulation): While cybersecurity stocks typically have low yields, US ETFs like BUG are required to distribute any generated dividends as taxable cash. In contrast, many UCITS funds offer "Accumulating" classes that reinvest dividends automatically. This reduces your tax liability in India and defers it until you sell the fund.
To learn more about UCITS ETFs and why Indian investors are choosing them, read our guide on UCITS ETFs.
Popular UCITS Alternatives for BUG
Here are the top four UCITS funds that serve as the best alternatives for focused cybersecurity exposure.
1. Global X Cybersecurity UCITS ETF
This is the official European twin of BUG. It is the exact UCITS equivalent of the US-domiciled BUG ETF, managed by the same provider, Global X. It tracks the identical underlying index, the Indxx Cybersecurity Index. This is the perfect option for investors who want exactly what BUG offers: a market-cap weighted pure-play exposure to companies directly benefiting from the increased adoption of cybersecurity technology, but within a tax-efficient, accumulating UCITS structure.
- Ticker: BUGG (LSE) / BUGP (Xetra)
- Total Expense Ratio (TER): 0.50%
- Top Holdings: CrowdStrike, Palo Alto Networks, Fortinet, Zscaler, Check Point Software.
2. iShares Digital Security UCITS ETF
Managed by BlackRock, LOCK is the largest cybersecurity-related UCITS ETF in Europe, making it the largest by AUM and the lowest-cost option in the space. Instead of a strict pure-play approach, it tracks the STOXX Global Digital Security Index, which casts a slightly wider net. It includes dedicated cybersecurity firms alongside established broader tech and digital infrastructure companies. Because of its massive scale, it offers the highest liquidity and the cheapest expense ratio in the sector.
- Ticker: LOCK (LSE)
- Total Expense Ratio (TER): 0.40%
- Top Holdings: Palo Alto Networks, CrowdStrike, CyberArk, Nutanix, Fortinet.
3. L&G Cyber Security UCITS ETF
ISPY is the pioneer European cybersecurity ETF with a balanced approach. It was one of the very first cybersecurity ETFs launched in Europe and remains incredibly popular. Tracking the ISE Cyber Security UCITS Index, ISPY splits its exposure between infrastructure providers (hardware and software creators) and service providers (consulting and secure services). This results in a more diversified portfolio across large and mid-cap tech stocks, reducing concentration risk compared to heavily top-weighted funds like BUG.
- Ticker: ISPY (LSE)
- Total Expense Ratio (TER): 0.69%
- Top Holdings: Broadcom, Cisco Systems, Palo Alto Networks, CrowdStrike, Check Point Software.
4. WisdomTree Cybersecurity UCITS ETF
CYBR offers a forward-looking, expert-driven index methodology. Unlike BUG's standard market-cap weighting, CYBR tracks an index built in collaboration with Team8, a specialized Israeli cybersecurity think tank. This expert-led methodology actively screens for companies driving key megatrends in the sector, like Cloud Security and Zero Trust. It leans much heavier into high-growth, pure-play disruptors, making it ideal for investors who prefer an actively researched methodology over simply buying the biggest names.
- Ticker: CYBR (LSE)
- Total Expense Ratio (TER): 0.45%
- Top Holdings: Palo Alto Networks, CrowdStrike, SentinelOne, Fortinet, CyberArk.
Invest in UCITS ETFs with Paasa
Paasa is a global investing platform designed for Indian investors. We provide direct access to over 10 global exchanges, including the United States, United Kingdom, Switzerland, Hong Kong, Germany, France, Canada, Netherlands, Japan, and Singapore.
This means you are not restricted to just US ETFs like BUG; you can also buy tax-efficient UCITS equivalents using Paasa.
The Compliance Advantage
Paasa makes global investing easy and also removes the compliance friction with a specialized layer built specifically for Indian residents:
- Schedule FA Reporting: Exact reports you need for your Indian tax returns, eliminating the need for manual calculations.
- Tax Filing & Advice: Access to expert tax advice and seamless filing support.
- FEMA & LRS Integration: Guidance on FEMA regulations and LRS limits to ensure compliance.
Whether you are buying direct US stocks or investing in UCITS ETFs listed on European exchanges, Paasa provides global access with India-specific compliance and tax support.
