Defiance ETFs has launched Europe’s first photonics ETF, offering investors targeted exposure to the optical technologies used to move rapidly growing volumes of data around AI systems and data centres. The Defiance Photonics UCITS ETF (PHOT) invests in companies developing, manufacturing and commercialising technologies that generate, transmit and process information using light rather than electricity.
The ETF has listed on the London Stock Exchange in sterling and US dollars, as well as Borsa Italiana in euros, with a Xetra listing expected to follow. It has a total expense ratio of 0.69%.
Photonics is becoming an increasingly important part of the infrastructure supporting artificial intelligence. Large AI systems require substantial amounts of data to move continuously between processors, memory chips, servers and networking equipment. Traditional copper connections can face limitations around bandwidth, distance, power consumption and heat as AI clusters grow. Optical connections can carry more data over longer distances while using less power for each unit of data transmitted.
PHOT provides exposure across the photonics supply chain, including optical components and light sources, photonic semiconductors, interconnect chips, networking systems, foundries, manufacturing equipment and enabling materials. Relevant technologies include lasers, transceivers, fibre arrays, connectors, modulators and photonic integrated circuits.
The ETF tracks the Indxx Defiance Global Photonics Index. Companies must generate at least 50% of their revenues from photonics-related activities to qualify for inclusion. Constituents are weighted by market capitalisation, capped at 10% and rebalanced quarterly.
The launch follows the recent introduction of the Defiance Memory UCITS ETF (DRAM), which QuotedData covered HERE. While the two funds both target areas of the AI infrastructure supply chain, they provide exposure to different technologies. DRAM invests in companies involved in memory semiconductors and data-storage systems.
The two launches illustrate how ETF providers are dividing the broad AI investment theme into increasingly specialised areas. Alongside processors, the expansion of AI is creating demand for supporting infrastructure such as power, cooling, memory, storage and networking.
PHOT is Defiance’s fifth European UCITS ETF since it entered the market earlier this year. Its European range, which also includes AI power infrastructure, drones and Ukraine reconstruction strategies, had accumulated $162.6m in assets by 6 July 2026.
Our view
David Batchelor, senior analyst at QuotedData, said: “This launch is targeting a very specific part of the AI theme, rather than the wider theme as a whole. Photonics could benefit from rising demand for faster and more energy-efficient data transmission, but PHOT is a narrow and relatively expensive thematic ETF. Photonics companies can be affected by rapid technological change, product obsolescence, intellectual-property risks and fluctuations in global technology spending. Investors also need to consider whether the fund provides genuinely new exposure within their portfolios or adds to existing technology holdings they own elsewhere”.
