Pictet Security Fund Rides Cybersecurity Demand to a 34.8% YTD Gain

A 34.8% YTD Gain: Pictet Security Fund Rides the AI-Driven Security Boom

The Pictet Security fund has returned 34.82 percent in euro terms since the start of 2026, outperforming the MSCI World by more than 20 percentage points, as rising demand for digital and physical security meets a wave of corporate spending on generative AI. Fund manager Savironi Chet describes the investable market as exceeding 500 billion dollars, spanning physical security, IT network security and identification.

The actively managed fund, launched in October 2006, holds roughly 36 stocks and 5.18 billion euros in assets, with the MSCI AC World EUR as its benchmark. Nearly two-thirds of the portfolio is in IT security companies, and cybersecurity is the largest theme. Crucially, the fund defines security narrowly: defense and armaments are explicitly excluded, so investors expecting weapons makers in the portfolio would be disappointed.

The recent performance has been exceptional. In the last quarter alone, the fund gained 46.47 percent in euro terms, more than 30 percentage points ahead of the broad global equity market, helped by longtime positions in cybersecurity and semiconductor security. Since inception, it has returned 571.33 percent versus 420.47 percent for its MSCI reference index.

The geographical allocation is heavily concentrated in the United States at 93.72 percent of assets, followed by Germany at 3.66 percent. By sector, IT security products account for 61.99 percent, physical security products 26.91 percent and security services 9.41 percent. The largest single position is KLA, a semiconductor inspection equipment maker, at 7.42 percent; Arista Networks also contributed strongly on demand for AI-based data-center switching.

Inside the Portfolio: Cybersecurity, Semiconductors and US Concentration

Why Generative AI Is the Fund's Main Engine

The management team, led by Savironi Chet alongside Yves Kramer and Alexandre Mouthon, argues that security demand is structural rather than cyclical. Generative AI widens the attack surface for companies and governments, which in turn drives spending on network security, identity management and tools to secure AI agents inside enterprises. That narrative is consistent with the fund's sector weights: IT security products alone make up nearly 62 percent of the portfolio.

A Portfolio That Tracks AI Infrastructure as Much as Security

Beneath the 'security' label, the fund's recent winners are closely tied to AI capital spending. KLA benefits from booming demand for semiconductor inspection equipment, while Arista's AI-based switching solutions for data centers are anchored to cloud-infrastructure investment. The fund has also taken profits in cybersecurity names after the sector's strong run and rotated toward AI-infrastructure positions. In effect, this is a concentrated US technology and AI-infrastructure bet, not a diversified global security fund.

The Performance Story Depends on the Benchmark

The year-to-date numbers are eye-catching, but the longer record is more nuanced. Over three years to 21 July 2026, the fund returned 53.24 percent in euro terms, or 15.44 percent annually, while the MSCI AC World EUR returned 59.54 percent, or 17.01 percent annually. Over one year the two are almost level, at 23.53 percent versus 24.85 percent. That means the recent MSCI World outperformance is partly a recovery after a period of underperformance, and investors comparing funds need to choose the right index and time frame.

Risk Is Part of the Design

The fund's three-year volatility of 20.79 percent and beta of 1.32 are well above the MSCI AC World's 11.64 percent volatility and beta of 1.00. One-year volatility rises to 26.14 percent. That elevated risk is the price of a specialized theme fund, and the 46.47 percent quarterly gain is a reminder that returns in this sector can spike sharply — and could reverse just as quickly if AI infrastructure spending cools.

What 'Security' Means Here — and What It Does Not

The fund excludes defense and armaments entirely. Its opportunity set is physical security, IT network security and identification, with KLA and Arista currently among the largest drivers. That distinction matters for investors who use 'security' as shorthand for military spending — they would need a different product for that exposure.

What Investors Should Check Before Buying Into the Pictet Security Fund

Investors weighing the Pictet Security fund should look at these specifics:

• Benchmark choice matters. The fund has beaten the MSCI World by more than 20 percentage points year-to-date, but against the MSCI AC World EUR it trailed over three years (+53.24% vs +59.54%) and was marginally behind over one year (+23.53% vs +24.85%). Outperformance claims depend heavily on which index and window you use.
• 'Security' here excludes defense. Arms and defense companies are explicitly out of the universe; the portfolio is about 62% IT security products, 27% physical security products and 9% security services. Investors wanting defense exposure would not get it from this fund.
• Expect above-market swings. Three-year volatility is 20.79% and beta is 1.32 against the MSCI AC World, with one-year volatility at 26.14%. The 46.47% quarterly gain is not a pace that can be extrapolated.
• Concentration cuts both ways. The US is 93.72% of assets and the top holding, KLA, is 7.42%. Recent performance is tied to AI infrastructure spending on data-center switching (Arista) and semiconductor inspection (KLA) — a slowdown in that capex would hit returns directly.