Where the Quantum Lives in D-Wave Hybrid Portfolio Optimization: An Operational Decomposition Audit

Abstract

Hybrid quantum-classical solvers conceal how reported performance divides between quantum-processing-unit (QPU) access and other service time. We audit D-Wave's Leap service on cardinality-constrained mean-variance portfolio instances from N=10 to 640, comparing constraint-native CQMs, penalty-encoded BQMs, Gurobi MIQP, simulated annealing, and a matched-budget Tabu baseline, and we propose a four-metric operational audit of the exposed timing fields. LeapHybridCQM matches Gurobi's proven optimum on all 54 head-to-head instances at N<=120, yet its mean QPU access is 0.034 s: 0.68% of the nominal five-second budget; telemetry does not resolve the residual into classical computation, orchestration, or budget granularity. Across 108 fixed-seed five-second CPU runs on 36 instances, TabuSampler reaches CQM-level objectives with mean absolute delta 0.00078 (maximum 0.00798); at N in {400,640} the mean is 3.04e-5. This establishes classical objective achievability, not an internal QPU ablation. We prove that quadratic encoding of exact cardinality adds a dense rank-one term and, apart from isolated exact coefficient cancellations, yields a complete logical graph independent of covariance support, with a bounded-degree embedding lower bound; the resulting density collapse is consistent with hybrid-BQM degradation. A descriptive five-window Fama-French overlay of post-projection direct-QPU portfolios yields mean Sharpe 1.94 versus 2.22 for 1/N. These results do not establish a quantum-sampling advantage; they motivate reporting QPU wall-clock fraction, optimality gap, density amplification, service-output variance, and matched-budget classical controls, keeping operational accounting separate from causal attribution.