Quantum computer technology has made great strides in recent years and is becoming increasingly affordable to develop and build. That's good news because the demand for more powerful computing is ballooning with the expansion of cloud computing, the proliferation of digital devices, and the dawn of the artificial intelligence (AI) era.
Quantum computing could emerge as a key technology and investment trend in the decades ahead. But because it's still in its infancy, the best way to invest in the industry could be via a quantum computing ETF.
The top quantum computing ETF: Defiance Quantum ETF
NASDAQ: QTUM
Key Data Points
Company | Defiance Quantum ETF % Weighting |
|---|---|
Micron Technology (NASDAQ:MU) | 1.86% |
Teradyne (NASDAQ:TER) | 1.81% |
MKS (NASDAQ:MKSI) | 1.76% |
Quantum Emotion (OTCMKS:QNCCF) | 1.76% |
Renesas Electronics (OTCMKTS:RENECY) | 1.67% |
Lam Research (NASDAQ:LRCX) | 1.63% |
Lockheed Martin (NYSE:LMT) | 1.62% |
Orange (OTCMKTS:ORANY) | 1.54% |
Mitsubishi Electric (OTCMKTS:MIELY) | 1.53% |
On Semiconductor (NASDAQ:ON) | 1.52% |
How to invest in quantum computing ETFs
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the ETF: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this fund.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Benefits of Defiance Quantum ETF
- It offers well-diversified exposure to the quantum computing industry before it gains widespread commercialization.
- The ETF invests in established semiconductor and software technology companies not solely dependent on the development of quantum computing, which could provide some stability to the fund's performance over time.
- In its short history, the Defiance Quantum ETF delivered a return of more than 395%, attributable to overall growth in the technology sector rather than quantum computing specifically.
What to look for when choosing a quantum computing ETF
Investors need to evaluate a few factors when choosing a quantum computing ETF, including:
- Investment focus: While only two ETFs focus solely on quantum computing, others invest more broadly in emerging technologies, including quantum computing and AI.
- Fund size: A small ETF is at greater risk of liquidation and returning capital to investors.
- Cost: Investors need to consider whether a fund's expense ratio is worth the cost.
Strategies for Investing in Quantum Computing ETFs
Here are some practical strategies for investors looking to invest in quantum computing ETFs:
- Invest in a larger ETF to avoid the liquidation risk and potential price manipulation.
- Consider investing in an ETF that focuses more broadly on emerging tech trends beyond just quantum computing for greater diversification and growth potential.
- Evaluate a fund's top holdings to ensure they're worthwhile quantum computing investments.
Future outlook for quantum computing and related ETFs
Quantum computing has taken a quantum leap from theory to reality in recent years after several companies made technological breakthroughs. As a result, investment in the sector could soar in the coming years, driving rapid revenue growth for quantum computing companies.
According to McKinsey, quantum computing revenue could rise from $4 billion in 2024 to $72 billion by 2035. That rapid revenue growth could boost the stock prices of quantum computing companies and the related ETFs that hold them.
Related investing topics
FAQ
Quantum Computing ETFs: FAQ
About the Author
Matt DiLallo has positions in Alphabet and Intel. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Honeywell International, Intel, International Business Machines, IonQ, Lam Research, Micron Technology, Microsoft, MongoDB, and Nvidia. The Motley Fool recommends Teradyne. The Motley Fool has a disclosure policy.
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