The nuclear industry fell on hard times and piled up heavy
losses following the Fukushima disaster in March 2011, which
resulted in the near-collapse of the uranium sector. In fact, the
price of uranium plummeted 51% since the meltdown (read:
Worst Performing Equity ETFs of 2013
With the ongoing nuclear developments globally, the sector seems
back on track. A major development is underway in Japan which is
looking to restart its 50 shuttered nuclear power plants later this
year. China is also seeking to expand its nuclear power capacity to
40 million kilowatts by 2015 and 58 million by 2017 from 12.54
million kilowatts at the end of 2011.
Further, other nations like India, France, Romania, South Korea,
Bangladesh, Turkey and the UAE are also focusing on the development
of the industry. Beyond these expansions, the need for new energy
sources to avoid the negative effects of using coal and to reduce
greenhouse gases has resulted in growing demand for uranium,
driving the nuclear power sector (read:
Will the Clean Energy ETF Surge Continue in
On the supply side, most of the top uranium producers have been
suffering from a series of operating problems that led to mine
closures in Australia, Namibia and the Republic of Niger. This has
reduced the global supply by about 15%. In addition, a deal between
the U.S. and Russia wherein the latter recycles uranium from
Soviet-era nuclear weapons for the former has expired, curtailing
the supply of uranium.
In fact, the uranium market will likely see a supply deficit in the
coming years as more power plants - as much as 33% - are expected
to come online by 2030, as per the World Nuclear Association.
Rising demand coupled with falling supply would result in higher
uranium prices as we move ahead in the year. Investors seeking to
ride out this trend could find either of the following two ETFs an
intriguing choice (see:
all the Material ETFs here
Global X Uranium ETF (
This fund offers a pure play in uranium with more of a focus on
uranium producers and less on nuclear energy producers. This is
done by tracking the Solactive Global Uranium Index. The fund
manages an asset base of $155.9 million, which is invested in a
basket of 23 securities, while charges 69 bps in annual fees.
Volume is moderate as it exchanges less than a million shares a
The product is highly concentrated on the top firm -
Cameco Corp. (
- at 23.38% of assets, suggesting heavy concentration. From a
country look, American securities make up just 11% of the total
assets, leaving the bulk to Canada (59%) and Australia (22%). The
ETF added over 8% in the year-to-date time frame.
Market Vectors Uranium + Nuclear Energy ETF (
This ETF provides broad exposure to the nuclear energy industry
rather than a concentrated bet on uranium producers like URA. The
fund currently tracks the DAXglobal Nuclear Energy Index but will
shift to the Market Vectors Global Uranium and Nuclear Energy Index
effective March 21 (read:
Are Nuclear Power ETFs Back on Track?
Holding a small basket of 18 stocks, the top two firms - Edf Sa and
Exelon Corp - dominate the fund's return with double-digit
exposure. In terms of country profile, Japan takes the top spot
with 24.4% share, closely followed by France (21.7%) and the U.S.
(20.5%). The product has amassed $75.7 million in its asset base
while it trades in light volume and the expense ratio hits 0.60%.
The ETF has added 2.8% so far this year.
Over the past two months, uranium has bounced back from its low and
has shown a strong run up in its prices and this trend will likely
continue in the coming months. This is especially true given the
start-up of idle and new reactors, a supply crunch, and rising
nuclear power demand, suggesting either of the aforementioned ETFs
could be an interesting play for 2014.
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CAMECO CORP (CCJ): Free Stock Analysis Report
ISHARS-GL NE (NUCL): ETF Research Reports
GLBL-X URANIUM (URA): ETF Research Reports
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