Defiance ETFs has launched the Defiance Quantum ETF (QTUM US) on NYSE Arca. The fund provides thematic exposure to a portfolio of global companies that are developing and applying machine learning and quantum computing technology.
QTUM provides exposure to global companies that are developing and applying machine learning and quantum computing technology.
The fund includes access to hardware companies and software makers, as well as defence and security firms within the quantum computing space.
According to Defiance, Quantum computing seeks to solve complex problems through computers using quantum-mechanical phenomena which accelerates the entire computing process and expands the range of what’s possible in machine learning, artificial intelligence (AI) and other applications.
Google and NASA have reported that a quantum computer they piloted together processes algorithms 100 million times faster than a traditional computer chip.
While nearly every industry has the potential to benefit from the growth of this technology, key applications are being built in finance, cybersecurity, drug discovery, energy and autonomous vehicles. There’s even the potential for quantum computing to help predict weather disasters.
“Quantum computing may sound like something from the distant future, but leading technology companies, start-ups and research universities are already developing and implementing these approaches to solve practical problems and build competitive advantages,” said Matthew Bielski, Founder and CEO of Defiance ETFs. “With QTUM, investors don’t need to wait on the sidelines. We’ve already seen demand from registered investment advisers (RIAs), family offices and ETF strategists interested in gaining targeted exposure to this technology via a liquid, transparent ETF.”
Defiance ETF Director of Research Tom Bowles, added, “This technology represents a massive leap forward for the world of computing—it’s comparable to the shift from valve computing to silicon chips. Companies are already applying it and will continue to apply it in myriad ways, from optimizing investment portfolios to debugging software and finding wholly new drugs.
“Quantum computing also has the potential to make cryptography, and the technology that relies on it, obsolete. The possibilities are endless, and public and private organizations have already demonstrated that they’re deeply interested in putting the technology to good use.”
The fund tracks the BlueStar Quantum Computing and Machine Learning Index. The index includes stocks from across the market cap spectrum with a minimum size of $150 million. Approximately three quarters of the index weight is assigned to stocks with market capitalizations greater than $5 billion.
Index provider BlueStar screens the broad universe of globally listed equities to determine which companies may be considered to be closely related to the themes of quantum computing and machine learning. It does this by analysing company annual filings, investor and analyst presentations, sellside research reports, industry reports and trade journals, and company descriptions on bonafide sources such as public websites and Bloomberg.
Constituents are equally weighted in the index, subject to certain liquidity constraints, as of each semi-annual rebalance.
There are currently 60 stocks in the index. Companies from the US account for three-quarters of the total index weight with the next largest country exposures being Japan (8.5%), Germany (3.4%), and Canada (3.4%).
The ETF comes with an expense ratio of 0.65%.
QTUM is the second ETF from Defiance ETFs, which specializes in portfolios that highlight disruptive technologies. The company’s first ETF – the Defiance Future Tech ETF (AUGR US) – launched in August and is designed to capture opportunities within the realm of augmented reality and virtual reality technology.
AUGR is listed on NYSE Arca and also comes with an expense ratio of 0.65%.
“We strongly believe that all investors should have the ability to access the most transformative and disruptive technologies of our time,” said Bielski. “We started Defiance to offer those opportunities, and provide investors with precise exposures to emerging technologies that complement the existing tech in their portfolios.”