Investing in a Quantum Computing ETF | The Motley Fool

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 progressively powerful computing units is ballooning with the expansion of cloud computing and the proliferation of digital devices.

Quantum computing could emerge as a key technology and investment trend in the decades ahead. Nevertheless, because it's still in its infancy, the best way to invest in the industry could be via a quantum computing ETF.

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Since quantum computing is still being developed, there are few companies out there solely dedicated to the technology. However, there are some well-known businesses funneling lots of research dollars into quantum computing, a newly public pure-play, and a couple more soon-to-be-public pure-plays in the quantum realm.

The best quantum computing stocks include:

Besides investing in individual companies, there is one ETF, or exchange-traded fund, dedicated to the quantum computing industry: Defiance Quantum ETF (NYSEMKT:QTUM). Defiance ETFs -- the company that sponsors this and other themed ETFs -- launched in 2018, with its Quantum ETF debuting in September 2018.

The Defiance Quantum ETF is made up of 70 individual stocks, primarily semiconductor and software companies that are working on, or have exposure to, quantum computing in some form or another. The fund is small, with total net assets under management of just $172 million. It has an expense ratio of 0.40%, which works out to $40 in annual fees for every $1,000 invested. The top 10 holdings in the fund are:

Data source: Defiance ETFs. Data as of Nov. 22, 2021.

Although there is only one quantum computing ETF available at the moment, there are other opportunities available for investors wanting to bet on the technology. IonQ is the first publicly traded pure-play stock in quantum technology. Likewise, the merger between Honeywell Quantum Solutions and Cambridge Quantum Computing will offer another opportunity for investors to get in on the movement early, although it's currently unclear when that deal will be complete. Rigetti Computing's pending merger via SPAC is another early-stage investment in the development of quantum processors.

IonQ, Rigetti Computing, and Honeywell are not a part of the Defiance Quantum ETF portfolio of stocks at this time.

For investors looking for an affordable way to passively benefit from the development of quantum computing, the Defiance Quantum ETF is worth considering. It's well-diversified across dozens of technology stocks, but it won't implode if quantum computing never takes off since most of these companies also rely on other tech trends such as AI and machine learning. If you want in on quantum computing at an early stage, this ETF is a good place to start.

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Investing in a Quantum Computing ETF | The Motley Fool