There’s an ETF for that? Quantum Computing

What is quantum computing?

Quantum computing sounds fancy, but at its core, it boils down to four key mechanics that make it different from traditional computing.

1. Superposition – Instead of just being a 0 or 1 like a regular computer bit, a quantum bit (qubit) can be both 0 and 1 at the same time. Imagine flipping a coin—until it lands, it’s both heads and tails. This allows quantum computers to process multiple possibilities at once instead of one-by-one like classical computers.
2. Entanglement – When two qubits become entangled, changing one instantly affects the other, no matter how far apart they are. Think of it like having two dice that always land on the same number, even if one is rolled on Earth and the other on Mars. This creates a powerful network effect that speeds up calculations.
3. Decoherence – Qubits are extremely sensitive and can lose their quantum state when disturbed by the environment, like how a perfectly balanced spinning top wobbles and falls when bumped. Keeping qubits stable long enough to perform calculations is one of the biggest challenges in quantum computing.
4. Interference – Quantum computers can use wave-like properties to cancel out incorrect answers and amplify the correct ones. It’s like noise-canceling headphones, but instead of blocking sound waves, quantum computers eliminate errors and refine solutions.

Traditional computers use binary bits, which are either 0 or 1 and process data in a step-by-step sequence. Quantum computers use qubits, which, thanks to superposition, can represent many values at once. This allows a quantum computer to solve problems exponentially faster than a classical computer.

For example, a traditional 8-bit system can store one of 256 possible numbers at a time (2⁸ = 256). But an 8-qubit system can represent all 256 possibilities at once.

As qubits scale up, their computing power increases exponentially rather than linearly, making quantum computers theoretically capable of solving problems that would take modern supercomputers millions of years to complete.

Quantum algorithms take advantage of this exponential scaling to solve problems that are practically impossible for regular computers. They can crack complex encryption, simulate molecules for drug discovery, optimize supply chains, and model financial risk in ways classical computing simply can’t.

Who are the players in quantum computing?

When it comes to quantum computing, it’s no surprise that the same three Big Tech giants dominating cloud computing and AI—Microsoft, Alphabet, and Amazon—are leading the charge.

These companies aren’t just interested in quantum computing for fun; with massive free cash flow, economies of scale, access to the best talent, and a relentless competitive drive, quantum computing has become a strategic necessity.

The potential breakthroughs in processing power, encryption, and AI make it investment in quantum computing too important for them to ignore. Right now, each company is innovating through its own quantum chip design:

• Microsoft – Majorana 1: Microsoft’s quantum chip is the first to use a topological superconductor, a new material designed to create more stable qubits. If traditional transistors were the building blocks of classical computers, topological superconductors could be the transistors of the quantum age, helping to reduce errors and increase processing reliability.
• Amazon – Ocelot: Amazon uses a cat qubit architecture, a system designed to extend the life of qubits by making them more resistant to noise and errors. This improves the accuracy of calculations, which is one of the biggest challenges in quantum computing.
• Alphabet – Willow: Alphabet’s quantum processor is arguably the most impressive so far. It recently completed a standard benchmark computation in under five minutes—a task that would take one of today’s fastest supercomputers 10 septillion years (that’s a 1 followed by 25 zeros). More importantly, Willow drastically reduced error rates, making quantum calculations far more practical for real-world applications.

For now, quantum computing is still in its early days, but these Big Tech giants are positioning themselves for what could be the next major leap in computing power.

There’s an ETF for that?

There’s no shortage of tech ETFs with Microsoft, Alphabet, and Amazon among their top holdings, but for investors looking for a dedicated quantum computing ETF, there’s currently only one option: the Defiance Quantum ETF

Defiance Investments, best known for its suite of options-based strategies, launched QTUM to track the BlueStar Machine Learning and Quantum Computing Index, which includes 72 holdings.

So far, the fund has performed exceptionally well, earning a 5-star Morningstar rating, a rare distinction signaling superior risk-adjusted returns relative to its tech-sector peers.

With an expense ratio of 0.40%, it’s also competitively priced—cheaper than comparable thematic tech ETFs from providers like Global X ETFs.

With just over $1 billion in assets under management (AUM), QTUM is in no danger of closing anytime soon, making it one of the more stable thematic ETFs in the market today.

This article is for informational purposes only and does not in any way constitute investment advice. The author may express their own opinions, which may not represent the opinions of ETF Central or its affiliated partners. It is essential that you seek advice from a registered financial professional prior to making any investment decisions.