QTUM ETF: The Diversified Way to Ride Quantum Computing Trends

Key Points

• Quantum computing is taking over artificial intelligence as the next big thing in the technology sector, and there's one ETF to get investors tapped in.
• For those who prefer selecting individual stocks, an ETF's weightings can offer guidance.
• Institutional capital agrees as it's been buying into these stocks as well.

The technology sector typically allows investors to tap into the best and brightest ideas in the stock market, with each advance making it to the top of the list of holdings in the NASDAQ 100 index. While 2024 was dominated mostly by artificial intelligence and semiconductor stocks, it looks like 2025 has a new ace up its sleeve in innovation.

Investors might have seen the topic of quantum computing floating around in the market recently, with names like Alphabet Inc. NASDAQ: GOOGL making one of the first breakthroughs as it announced its new Willow computer. However, just like the race for electric vehicles, picking the winner amongst all of the participants can be a daunting—if not risky—task.

So, today, investors can forget about having to pick and choose which stock and company poses the best plan for the future of quantum computing as the market has realized a potential bottleneck in demand, so it created an exchange-traded fund (ETF) to give investors access to a diversified exposure into the world of quantum computing. This is where the Defiance Quantum ETF NASDAQ: QTUM comes into play.

The Importance of Investing in Quantum Computing

Most investors do not yet understand quantum computing and its proposition to the world. To keep it simple, normal computers today have to do one calculation at a time, and no matter how fast they are, that is where their potential unfortunately ends.

In physics, an atom can be in multiple places at once, and someone connected this concept in the search of making computers more powerful than ever. The outcome? Atoms are the horsepower behind quantum computers, allowing them to make several calculations, run several simulations, and render a massive amount of data all at once.

This is important because, as the technology becomes commercialized, industries like finance could be the first ones to get behind this, as investment banks and their quantitative (quant) departments are always on the hunt for computational power.

What this means for investors is twofold. First, they can get behind this technology before it becomes commercialized, and second, the world of investing might soon change forever. Either way, the market is giving everyone a way out of this, letting Main Street get in early and not get left behind.

Holdings Reflect Conviction in This ETF

Now, for those who like to pick their own stocks, there is also an alternative strategy here. Looking at the ETF and its holdings, investors will notice that Rigetti Computing Inc. NASDAQ: RGTI is at the top of the list. This could be because the company has more promising technological setups or because of its price action.

No one can deny that momentum is favoring Rigetti Computing stock. The past 12 months have pushed it to a net performance of up to 1,964%, outpacing every other name exposed to quantum computing trends. As bullish as this might have been, some on Wall Street think the party can keep going.

Those at J.P. Morgan Chase decided to boost their positions in Rigetti Computing stock by 3.4% as of December 2024, and if this bank isn’t afraid of buying into a running stock, neither should investors. A similar trend can be seen in the second-largest holding in this ETF, D-Wave Quantum Inc. NYSE: QBTS.

This stock has delivered a one-year performance of up to 989%, not as big as Rigetti Computing, but very respectable considering that quantum computing is only getting started in its attention-grabbing path. And just like Rigetti Computing, some institutional buyers were interested in seeing how much higher this stock could go.

That’s why, as of November 2024, Penserra Capital Management decided to boost its holdings in D-Wave Quantum by as much as 23%. This new addition brought its net position to a high of $4.4 million, or 2.2% ownership in the company. This is one bullish factor investors can’t ignore.

What can’t be ignored is that momentum is very much present in these quantum computing names, and institutional capital flows to them all around. Considering this is only the beginning of the technology as the market knows it, it would be like finding a Tesla Inc. NASDAQ: TSLA before it was a Tesla.