VanEck is delighted to announce that its VanEck Quantum Computing UCITS ETF has surpassed $100m in assets under management in three months. This is an opportunity to take a closer look at ETFs in this sector and observe the quantum computing ecosystem on the stockmarket.

Here we take an overview of a US ETF’s approach towards Quantum Computing, a current market revolution that is hot on everyone’s lips and which is due to profoundly reshape the future. The fund in question is Defiance Quantum ETF. 

 

In short, a quantum computer outpaces ‘traditional’computers’ calculations – already phenomenal – through a combination of superposition and entanglement, providing unprecedented IT power. 

 

The Defiance Quantum ETF includes some 70 stocks – naturally some US tech giants, including Alphabet, Nvidia and Oracle, amongst others. Asian, and notably Japanese stocks, such as Fujitsu and NTT, also feature, with Taiwanese players also featuring. Finally, European players, including Germany’s Infineon and France’s Orange are also present. All said, tech stocks in many shapes and forms… 

 

Alongside these big names – known by the street, diving deeper into the list we also see more specialist companies – Asustek Computer (Taiwan) or Rigetti Computing (US).  

 

Investors indeed like the fund, portrayed by AuM jumping from €271m a year ago to €1,338m today (phenomenal growth of 4.3x). 

 

In the choppy waters of markets today, the fund also posts a YTD performance exceeding +14%, keeping an edge on the Nasdaq (+10.5%), for example. 

For readers based in Europe, we suggest the Vaneck ETF, below:

This ETF has 29 positions. It includes some heavyweights with a dedicated quantum computing division, such as Intel, Alphabet, Microsoft, and IBM. While the selection favors the United States, it also includes Samsung Electronics, Deutsche Telekom, Infineon, Fujitsu, Sony, Nokia, and Ericsson. More surprisingly, Boeing, Wells Fargo, Bank of America and Deutsche Telekom are also included. Why? These companies are interested in quantum computing through various projects, such as Wells Fargo and Boeing (although the latter has clearly not yet fully exploited the concept of “how quantum computers could help design aircraft” cited in the example).

But it is the lesser-known or more specialized players that are the most interesting

The top three weightings are IonQ (8.6% of the ETF’s net assets), Synopsys (5.8%) and Rigetti (5.1%).

IonQ and Rigetti are pure players in quantum computing. This means that the stocks are extremely expensive but are not close to earning their first dollar, as Nvidia’s voluble CEO Jensen Huang suggested earlier this year. Synopsys is a more diversified and well-established player that has been generating profits for a long time. The ETF’s fourth-largest holding, D-Wave (4.96% of assets), is also similar to Rigetti and IonQ: no revenue, huge fundraising and lots of promise. Quantum Computing (2.2% of assets under management) also has its place in the ETF as a veteran of the sector. Finally, the last weighting is Arqit Quantum (0.35% of assets under management), a promising British company that has gone public in the United States.

Technically, VanEck’s thematic ETF is a physically replicated capitalization product with relatively high fees (0.55%) and significant risk, tempered by the large tech, industrial, and telecom stocks in the selection. The euro version is available here.

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