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This Quantum Computing ETF Is Crushing Broader Benchmarks

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Quantum computing is the territory of highly educated, sophisticated computer programmers, coders, engineers and related fare, so don't worry if you don't get exactly what it is. Just know that quantum computing is being put to work in a high-flying exchange traded fund.

The Defiance Quantum ETF (NYSE: QTUM) debuted 13 months ago as the first ETF backed by quantum computing technology and the results have been spectacular this year. Entering Thursday, QTUM had a year-to-date gain of 40%, well ahead of the S&P 500 and Russell 1000 indexes.

QTUM follows the BlueStar Quantum Computing and Machine Learning Index. All Defiance ETFs, including the Defiance 5G Next Gen Connectivity ETF (NYSE: FIVG) and the newly minted Defiance Next Gen Food And Agriculture ETF (NYSE: DIET), follow BlueStar benchmarks.

Why It's Important

QTUM's underlying index “is a rules-based index comprised of equity securities of leading global companies engaged in the research & development or commercialization of systems and materials used in quantum computing: advanced traditional computing hardware, high powered computing data connectivity solutions and cooling systems, and companies that specialize in the perception, collection and management of heterogeneous big data used in machine learning,” according to Defiance ETFs.

None of the fund's holdings exceed weights of 2.08% and as one might expect, QTUM is heavily rooted in the technology sector. While the fund is home to some stocks found in more traditional technology ETFs, its emphasis on technologies of tomorrow.

Over 46% of QTUM's weight is devoted to companies with quantum computing and machine learning exposure while another 17% is allocated to semiconductor makers operating in the booming artificial intelligence space.

What's Next

QTUM certainly fits the bill as a thematic ETF, but what's most important is that its performance justifies the underlying theme. Additionally, the cost of admission, 0.40% per year, or $40 on a $10,000 investment, is reasonable compared to some other thematic funds.

Add to that, there are inklings of increased in QTUM do to some recent breakthroughs in the quantum computing arena.

“We have seen increased institutional interest in QTUM, given the recent announcement of Google reaching quantum supremacy,” Defiance CEO Matthew Bielski said in a statement.

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