You might have heard about the nascent advances in quantum computing with the likes of Google achieving “Quantum Supremacy” back in 2019. So far the financial gurus of Wall Street have not been apparently paying that much attention. Or have they?
What if you wanted to join the so called party and invest in this fledgling area? What can any non-finance types do? There certainly are a number of potential ways to get a piece of the Quantum Computing pie, but remember that many companies are private and essentially off-limits to most investors. The likes of StrangeWorks, Xanadu and Riverlane are all private companies backed by Venture Capital funds, which means mega amounts of risk and massive capital invested. That said, let’s look at just a few ways to get involved. You might consider this an extension of an earlier article we published on Investment in the Quantum Space.
Strategies for Investing in Quantum Technology
All information here is not meant as advice – the usual disclaimers of course. So please consult with your financial advisor should you decide to go ahead. The point here is to illustrate what Joe Public might do to invest in Quantum Computing and its associated technologies.
Invest in Public Companies
You will have heard of many of these companies (IBM, Microsoft’s and not forgetting Google), and by buying into these companies you will be naturally investing into their Quantum efforts. One thing to remember here is that their Quantum divisions are usually a small part of their offering and whilst each company is cagey about how many employee’s it has in their Quantum divisions, I think it is safe to say that percentages are going to under one percent. That means limited exposure to Quantum and hence perhaps the drawbacks as none of these companies are pure play quantum computing companies like Riverlane or Xanadu for example.
A list of companies is provided here, but very few out of the over one hundred companies are actually public (meaning there is a stock market listing). You can build your very own portfolio of companies (with weightings as you want) or you could buy a readymade portfolio index.
Invest in a Quantum Computing Tracker Fund
As is common for sectors such as Technology, Media, Finance or generally anything you can group together. Often referred to as an Exchange Traded Fund or ETF, there is one such Tracker that covers Quantum Computing. Aptly named QTUM, the company called Defiance launched the QTUM fund to focus on two somewhat related key areas: Quantum Technology and Machine Learning. The fund has today (7th Jan 2020) 84 different stocks in its portfolio ranging from Apple to Xilinx and was launched towards the end of 2018. It currently trades on the NYSE and is available to invest in for US based individuals or those with a foreign trading account. So far since inception the return has been around 20% (not a bad return). Of course the future may not be so kind.
Investing in QTUM offers investors a simple liquid, transparent and inexpensive way access to companies developing and applying Quantum Computing and other transformative computing technologies. Costs are typically around 0.65% per year. You could build your own portfolio but of course to buy almost one hundred companies you would incur significant trading costs although no holding fee. Plus you would need to have access to all the different country exchanges. One downside may be that this not purely a Quantum Computing tracker and there will still be a bias towards Machine Learning, because there are simply just more companies in that space.
Invest in Shovels in the race for Quantum Computing
With the rise of Apple Computers (the second time around), many people made great investment decisions that were not simply buying the Apple Company shares. They bought suppliers for examples or companies that Apple relied on. The same could be true for Quantum Computing for those who really want to understand what may make the market tick. It could be materials or technologies used for Qubits (right now there is no consensus).