insider brief
- Bloomberg reports that the Defiance Quantum ETF has experienced significant inflows into the quantum technology-focused exchange traded fund.
- QTUM is designed to track stocks related to quantum computing and related technologies and has attracted approximately $250 million in inflows through December.
- The influx began in earnest after Google announced the impressive performance of its new chip, Willow.
The Defiance Quantum ETF (QTUM), a niche fund related to quantum computing, has experienced unprecedented inflows following recent announcements about the performance of Google's Willow chip, according to . bloomberg.
Cash surge and market reaction
According to Bloomberg, QTUM is designed to track stocks related to quantum computing and related technologies, and so far in December, investors have purchased approximately 250 million shares in the investment vehicle. It is said to be attracting an influx of dollars. This jump dwarfs the previous $164 million in net inflows since its founding in 2018. The fund is up 17% this month. This was spurred by Google's announcement that its new Willow quantum chip solved a computational problem in five minutes that would take a supercomputer an estimated 1 billion years.
Quantum computing stocks rose, including Google and quantum-focused companies like Righetti Computing and DWave Quantum, Bloomberg reported. DWave's stock is up more than 800% this year, and Righetti's is up more than 1,000%. Google's announcement solidified investor enthusiasm compared to last year's frenzy around artificial intelligence.
“Quantum is experiencing the same moment that AI experienced last year. Many quantum stocks are not widely held by ETFs, making QTUM really the only pure investment,” Bloomberg Intelligence said. Analyst Athanasios Psarofagis said. “I wouldn’t be surprised if we see more quantum-related applications in the near future.”
Understanding quantum computing and ETFs
Quantum computing uses the principles of quantum physics to perform calculations that theoretically far exceed the capabilities of conventional computers. These machines excel at solving specific complex problems with large numbers of variables, offering potential innovations in areas such as drug discovery, climate modeling, and financial forecasting.
An exchange-traded fund (ETF) is an investment vehicle that tracks the performance of an underlying index, sector, or asset class. QTUM tracks the BlueStar Quantum Computing and Machine Learning Index (BQTUM), which includes companies engaged in quantum computing, machine learning, cloud computing, and advanced hardware. The index is made up of 71 publicly traded stocks from around the world, including tech giants Alphabet (Google's parent company) and Nvidia, as well as smaller quantum-focused companies.
ETFs provide equal weighting to their components, ensuring balanced exposure across companies regardless of size. Reviewed semi-annually, eligibility and weighting are adjusted based on liquidity.
Impact on investors and market background
Until Google announced Willow, QTUM's performance had been disappointing, reflecting a lack of interest in quantum computing as an investment theme. But the recent surge highlights how quickly advances in this area can change market dynamics. Analysts speculate that QTUM's role as one of the few quantum-focused ETFs has added to its appeal during this rally.
Founded in 2018, the Defiance Quantum ETF highlights the growing demand for niche ETFs targeting innovative technologies. According to its website, QTUM is open to companies advancing artificial intelligence, machine learning, and high-power computing. These fields are seen as increasingly interdependent, and quantum computing is positioned to accelerate machine learning and AI applications.
Although recent cash inflows suggest growing optimism, quantum computing remains a speculative field. Developing real-world applications is complex and can take years to reach widespread adoption. Nevertheless, Bloomberg reports that Googlet's milestone and growing interest in QTUM could lead to more ETF launches and investments targeting quantum technology.
