Quantum Computing ETFs & Funds

Why an ETF?

Quantum computing is an emerging technology with enormous potential but significant uncertainty. Nobody knows which company will dominate — or whether the biggest winners are companies that don't exist yet. An ETF (Exchange-Traded Fund) lets you spread your investment across many companies, reducing the risk of picking the wrong one.

For UK investors, ETFs also offer simplicity: one purchase, one position, and you're exposed to the entire sector.

The QTUM ETF

The Defiance Quantum ETF (NYSE: QTUM) is the best-known quantum computing ETF. It tracks the BlueStar Quantum Computing Index, which includes companies involved in quantum computing hardware, software and related technologies.

Key features:

• Ticker: QTUM (listed on NYSE)
• Holdings: typically 60-80 companies, including IBM, IonQ, Rigetti, D-Wave, Microsoft, Alphabet and others
• Expense ratio: around 0.40% per year
• AUM: has grown significantly as interest in quantum has increased
• UK access: available through most UK brokers that offer US stocks (Interactive Investor, Hargreaves Lansdown, Trading 212, etc.)

Holding QTUM in a UK Stocks and Shares ISA shields you from Capital Gains Tax on any profits. The ETF itself is US-listed, so the 15% US dividend withholding tax applies (under the UK-US tax treaty).

Other Ways to Gain Exposure

Technology-Focused ETFs

Several broader technology ETFs include quantum computing stocks among their holdings:

• Invesco QQQ (NASDAQ: QQQ) — tracks the Nasdaq-100, which includes Microsoft, Alphabet, IBM and IonQ
• Vanguard Information Technology ETF (NYSE: VGT) — broad US tech, including IBM and Microsoft
• iShares Tech Breakthrough ETF (BATE: IBTE) — London-listed, UCITS-compliant, includes quantum-exposed companies
• VanEck Semiconductor ETF (NASDAQ: SMH) — indirectly exposed, as quantum computing relies on advanced semiconductor manufacturing

UK-Listed UCITS ETFs

If you prefer London-listed ETFs (which avoid the need for US tax forms and currency conversion), consider:

• iShares Digitalisation UCITS ETF (LSE: IBTE) — includes companies driving digital transformation, some with quantum exposure
• Lyxor Smart Economy UCITS ETF — covers disruptive technology themes including quantum
• General technology ETFs — such as iShares S&P 500 Information Technology (LSE: IITU), which holds Microsoft and IBM

The trade-off with broader ETFs is that quantum exposure is diluted — these funds hold hundreds of companies, so even a strong quantum rally won't move the whole fund dramatically.

Big Tech as an ETF Proxy

An alternative approach is to invest in ETFs or individual positions in big tech companies that have significant quantum programmes. The advantage is that these companies are profitable, so you're not paying for pure quantum hype — you're paying for a real business with a quantum optionality.

• Microsoft — topological qubits + Azure Quantum platform
• Alphabet — quantum supremacy claims + quantum AI research
• IBM — the quantum hardware leader + cloud platform
• Honeywell — majority owner of Quantinuum

What About a Quantum Basket?

For investors who want more targeted exposure than a broad tech ETF but more diversification than a single pure-play stock, a "quantum basket" approach works well. For example:

• 40% in a broad tech ETF (QQQ or similar) — for stability
• 30% in IBM, Alphabet or Microsoft — for low-risk quantum exposure
• 20% in QTUM — for sector-wide exposure
• 10% in IonQ, Rigetti or D-Wave — for high-risk, high-reward pure-play exposure

This is just an example framework, not a recommendation. The right allocation depends on your risk tolerance, investment horizon and overall portfolio.

Risks of Quantum ETFs

• Small market — the quantum sector is still tiny, so ETFs may be concentrated in a few stocks despite appearing diversified
• Hype sensitivity — quantum stocks can surge on news (AI-style hype) and crash just as fast
• Long time horizon — meaningful commercial returns may be 5-10 years away; ETFs charge fees every year you wait
• Index inclusion lag — new quantum companies may not be in the index yet, and failed ones may linger

The Bottom Line

For UK investors who want quantum exposure without stock-picking, the QTUM ETF is the most direct option. Broader technology ETFs offer safer, more diluted exposure. A combined approach — mixing a tech ETF, big tech stocks and a small pure-play allocation — balances risk and reward sensibly.

Next Steps

• Top Quantum Computing Stocks — the individual companies
• How to Buy Quantum Stocks in the UK — practical broker guide
• Risks of Quantum Investing — what can go wrong

Nothing on this site is financial advice. All content is educational. Always do your own research and consult a qualified financial adviser before making investment decisions. Back to all guides.