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Considering all the fanfare it receives, much of it framed as “the next big thing” following artificial intelligence (AI), it may be surprising that the universe of dedicated quantum computing exchange traded funds isn’t more heavily populated.
Likely unbeknownst to many advisors and investors, the “legacy” in the quantum computing category turned seven years old last month and that occasion was celebrated in style as the fund topped $2 billion in assets under management. That tally has since grown closer to $2.8 billion. Translation: there’s appetite for quantum computing via the ETF wrapper.
Thanks to last week’s debut of the WisdomTree Quantum Computing Fund (WQTM), investors now have a bit more choice at the intersection of ETFs and this disruptive technology. The new ETF follows the WisdomTree Classiq Quantum Computing Index, which as the name implies, was developed in partnership with Classiq – a purveyor of quantum software.
Important WQTM Tidbits
With quantum computing being a young industry in investment terms and one currently more prone to hype than results, how the related ETFs are built is meaningful. Regarding the new WisdomTree product, its index features protocols that ensure some level of quantum computing purity.
“Each company is assigned a Relevancy Score (3–1) based on the importance of its quantum activities. Firms are further classified as Pure Players (primary focus on quantum) or Diversified Innovators (quantum as part of broader business),” according to the issuer.
The purity score extends to WQTM’s weighting of individual securities, which is relevant because if the rookie ETF employed traditional cap weighting, its biggest components would be the likes of Alphabet (GOOG), Microsoft (MSFT) and Nvidia (NVDA). Those companies have quantum computing exposure, but they’re not “quantum computing companies.”
Said another way, if you’re buying a quantum computing ETF, you want a quantum computing ETF, not a basic tech fund in disguise. And those that are mulling funds like WQTM have good reasons to do and equally good reasons to ensure those funds are pure.
“For investors, the significance of quantum computing extends far beyond technological novelty. It is poised to become a foundational platform for innovation, like semiconductors in the 1960s, the internet in the 1990s and cloud computing and artificial intelligence today,” notes Christopher Gannatti, global head of research at WisdomTree. “Its impact is expected to ripple across industries, with the potential to transform existing markets while creating entirely new ones. The companies building this ecosystem are not merely developing a technology; they are potentially laying the groundwork for decades of innovation and sustained economic growth.”
Another WQTM Perk
As noted above, there’s a lot of hype when it comes to pure-play quantum companies, but not much (yet) in the way of tangible results. It’s one reason why some quantum computing equities are bona fide meme stocks.
That speaks to the difficulty in stock-picking in the quantum sphere and the nascent industry’s elevated risk profile – issues that can be somewhat mitigated with the ETF wrapper. Bottom line: Quantum computing could well be the next big thing in tech, but it won’t be a risk-free bet. WQTM can damp some of those risks.
“Quantum computing represents far more than the next step in technology; it is the dawn of a new era of discovery and innovation,” concludes Gannatti. “As breakthroughs accelerate and the ecosystem matures, quantum has the potential to reshape industries, redefine problem-solving and unlock solutions to challenges once thought intractable. By providing investors with highly relevant exposure, our strategy seeks to participate in this historic transformation—capturing not just growth but a front-row seat to one of the most profound technological revolutions of our time.”
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