Nuclear ETFs in Style, not Radioactive
There was a time when anything involving nuclear power carried with a negative connotation. Countries and U.S. states eschewed nuclear power in favor of new wave green energy sources, such as wind and solar.
An interesting move to be sure because, quiet as it has been kept in some circles, nuclear energy isn’t just reliable, it’s also one of the cleanest forms of energy. Consider the following. Europe is devoted in its quest to embrace clean energy, but it’s not giving up on nuclear. In fact, some countries there, including France – the Eurozone’s second-largest economy – are making new investments in nuclear power facilities.
Recent analysis conducted by the European Commission’s Joint Research Centre noted it “did not reveal any science-based evidence that nuclear energy does more harm to human health or to the environment than other electricity production technologies already included in the taxonomy as activities supporting climate change mitigation.”
That’s just one take, but it confirms nuclear power is resurgent. So is the related investment thesis. With that in mind, some of the following nuclear exchange traded funds could build on recent gains and deliver over the long-term.
Global X Uranium ETF (URA)
Having debuted 13 years ago, the Global X Uranium ETF (URA) is one of the forefathers of the nuclear ETF space. It’s also, perhaps surprisingly to some ETF industry observers, home to $2.35 billion in assets under management. That makes it the fourth-largest ETF in the expansive Global X stable.
Those are superlatives, but there’s more to the URA story. The ETF, which follows the Solactive Global Uranium & Nuclear Components Total Return Index, is up nearly 163% over the past three years. During that period, the S&P Global Clean Energy Index lost more than 34%. In other words, nuclear has been a better bet than many standard renewable energy ETFs. Past performance isn’t guaranteed to repeat, but the outlook for URA holdings is increasingly bright.
“These global initiatives delineate the vital role that nuclear energy plays in decarbonisation efforts. The omnipresent shift away from fixed fossil fuels demonstrates the need for an on-demand clean source of energy to achieve net zero goals,” according to Global X research. “Nuclear is a crucial energy source in filling energy production gaps associated with the energy transition. We can see in the United States, for example, nuclear power’s outsized reliability relative to other energy sources.”
VanEck Uranium+Nuclear ETF (NLR)
The VanEck Uranium+Nuclear Energy ETF (NLR) tracks the MVIS Global Uranium & Nuclear Energy Index and represents a different though potent avenue to nuclear power investing. That potency is confirmed by a year-to-date of 32.8%.
NLR, which debuted in August 2007, offers some depth among nuclear ETFs as it focuses companies building nuclear facilities, producers of nuclear power and those that provide related technologies and services. That mix could set NLR up for long-term success as nuclear power experiences a renaissance.
“The global shift towards clean energy has cast a spotlight on the nuclear energy and uranium industries as potential, or even necessary, contributors to a low-carbon energy future. Nuclear power is seen as a viable alternative to fossil fuels as it generates a substantial amount of electricity with minimal greenhouse gas emissions,” according to VanEck Research. “This perspective has fostered a renewed interest in nuclear energy leading to new nuclear power projects, research into advanced nuclear technologies, and the exploration and development of new uranium mining sites to meet anticipated demand.”
Sprott Uranium Miners ETF (URNM)
The Sprott Uranium Miners ETF (URNM) is arguably an unsung hero of the nuclear ETF conversation. It shouldn’t be. Not with a year-to-date gain of 51.1%. This nuclear ETF, which tracks the North Shore Global Uranium Mining Index, is surprisingly hefty with $1.54 billion in assets under management and is a pure play on uranium miners and the physical commodity.
URNM’s exposure to uranium miners is attractive at time when spot uranium prices are near 12-year highs and as there’s emerging sentiment to restart activity at some uranium mines. That’s nothing new for this often overlooked commodity.
“Over the longer term, physical uranium and uranium equities have demonstrated significant outperformance against broad asset classes, particularly other commodities. For the five years ended October 31, 2023, the U3O8 spot price has risen a cumulative 162.28% compared to 25.76% for the broader commodities index (BCOM),” according to Sprott research.
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