Quantum Computing-Focused ETF Leading the Pack in the Sector
Quantum computing technology has seen significant advancements recently, making it more affordable for development and construction. This development is beneficial as the demand for more potent computing increases due to cloud computing expansion, an abundance of digital devices, and the advent of the AI era.
Quantum computing could become a significant technology and investment trend in the future, especially since it's still in its infancy. Investing in this industry might be best achieved via a quantum computing ETF.
What is quantum computing?
Quantum computers employ superposition, a phenomenon observed at the subatomic level where particles lack a defined state. Utilizing superposition can greatly enhance computing speed, helping solve complex real-world problems, such as optimizing logistics or modeling drug structures.
Leading companies
While quantum computing is still under research and development, publicly traded companies focusing on this technology are scarce. However, several well-known businesses heavily invest in quantum computing research. Notably, a few pure-play stocks have entered the market recently.
The top quantum computing stocks include:
7.9%
- Microsoft (MSFT 1.14%): With multiple research labs and quantum computing services provided through Azure cloud, Microsoft plays a significant role in the field.
- Nvidia (NVDA 4.45%): As a leading AI semiconductor designer, Nvidia is also working on a quantum computing software stack and hybrid quantum computing unit in cooperation with Quantum Machines.
- Honeywell (HON 0.44%): Honeywell's quantum computer development led to the merger of its Honeywell Quantum Solutions unit with Cambridge Quantum Computing, resulting in the creation of Quantinuum for the nascent quantum computing industry.
- IBM (IBM 1.23%): IBM's offerings include both quantum computing solutions and software, as well as a community of more than 210 partner companies and research institutions.
- IonQ (IONQ 10.84%): IonQ, a start-up, merged with a special purpose acquisition company (SPAC) to build a quantum computing network accessible via cloud computing.
- Alphabet (GOOG 1.31%)(GOOGL 1.25%): Google revealed its Willow quantum computing chip, capable of conducting a computation in less than five minutes that would take traditional supercomputers more time than the current age of the universe.
Exchange-Traded Fund (ETF)
5.8%
An ETF allows investors to buy multiple stocks or bonds at once.
Defiance Quantum ETF
4.6%
Besides investing in individual companies, there's an ETF dedicated to the quantum computing industry: Defiance Quantum ETF (QTUM 1.42%). Launched in 2018, Defiance ETFs launched the Quantum ETF in September 2018.
The Defiance Quantum ETF consists of 71 individual stocks. The fund primarily invests in semiconductor and software companies working on quantum computing in some capacity. As of late 2024, the fund's total net assets under management (AUM) amount to $417.3 million, with an expense ratio of 0.40%.
3.3%
The top 10 fund holdings include:
| Company | Defiance Quantum ETF % Weighting || --- | --- || Rigetti Computing (NASDAQ:RGTI) | 7.9% || D-Wave Quantum (NYSE:QBTS) | 5.8% || IonQ (NYSE:IONQ) | 4.6% || Microstrategy (NASDAQ:MSTR) | 3.3% || Marvell Technology Group (NASDAQ:MRVL) | 1.8% || Coherent (NYSE:COHR) | 1.8% || IBM (NYSE:IBM) | 1.7% || NTT Data Group (OTC:NTDT.Y) | 1.7% || Wipro (NYSE:WIT) | 1.6% || Tower Semiconductor (NASDAQ:TSEM) | 1.6% |
1.8%
Benefits
- Offers diverse exposure to the quantum computing industry before it reaches widespread commercialization.
- Investment in established semiconductor and software companies not dependent on quantum computing development can provide some stability to the fund's performance.
- In its brief history, the Defiance Quantum ETF has increased nearly three-fold in value, primarily due to the technology sector's overall growth rather than quantum computing specifically.
1.8%
Opportunities
Investing in quantum computing has considerable growth potential in the future. A wide range of industries, such as pharmaceuticals, finance, energy, and logistics, can benefit from quantum computing's increased computational power. However, it's essential to remember that investing in this field also involves risks due to its cutting-edge nature. Unlike traditional computing, quantum computing technology is still developing and has yet to be proven at scale, so ongoing research, technological advancements, and government policies can significantly impact future returns.
1.7%
Despite just one quantum computing ETF currently available, investors with an interest in this technology have various opportunities. IonQ became the first publicly traded pure-play stock in quantum tech, although it's important to note that the company is still a startup, generating minimal revenue and incurring losses.
The merger of Honeywell Quantum Solutions and Cambridge Quantum Computing, now known as Quantinuum, gives investors another chance to support the movement at an early stage. Honeywell holds the majority stake in Quantinuum.
1.7%
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Why Invest in Quantum Computing?
Why Invest in Defiance Quantum ETF?
The Defiance Quantum ETF offers a cost-effective means for investors to passively profit from the development of quantum computing. Diversified across multiple tech stocks, it can withstand potential slowdowns in quantum computing's growth due to its reliance on established trends such as AI and machine learning.
If you're keen to invest in quantum computing early on, this ETF serves as an excellent starting point.
Frequently Asked Questions
Are quantum computing ETFs available?
Yes, there is only one quantum computing ETF: Defiance Quantum ETF. The fund tracks more than 70 companies involved in research and development, or the commercialization, of quantum computing systems and materials.
How to invest in quantum computing?
Investors interested in quantum computing can opt for a company operating in the sector, like IonQ, IBM, Nvidia, or Honeywell. Alternatively, they can consider investing in the Defiance Quantum ETF, the only ETF focusing solely on Quantum Computing.
Which company is leading in quantum computing?
IBM is often recognized as the current leader in quantum computing, having launched Quantum System Two, a modular quantum computer powered by its Heron chip. Google, however, is narrowing the gap using its breakthrough quantum computing chip, Willow, projected to complete a computation five minutes faster than today's supercomputers would need a septillion years to accomplish. According to Google, Willow could surpass the age of the Universe.
Suzanne Frey, an Alphabet executive, is a member of our board of directors. Matt DiLallo owns shares in Alphabet. Our website recommends Alphabet, Microsoft, and Nvidia among other investments and options. Our website has a disclosure policy.
Investing in the quantum computing industry might be a profitable opportunity in the future due to its significant potential. This can be achieved through a quantum computing ETF, such as the Defiance Quantum ETF.
The Defiance Quantum ETF offers diverse exposure to the quantum computing industry before it reaches widespread commercialization, providing some stability to the fund's performance due to investment in established semiconductor and software companies.
