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The uranium ETF landscape is becoming increasingly populated due to a number of factors. On the one hand, there is the basic rise in popularity among ETFs. On the other hand, there is a worldwide surge in interest in nuclear power, and uranium is at the forefront of this shift.
ETFs represent an easy way for less-engaged investors to play trends. You don’t have to be very familiar with the underlying asset in play. You also do not have to be very knowledgeable, if at all, when it comes to the various companies that comprise the ETF or the Index that the ETF tracks. As long as you are reasonably confident in the trend of a given resource class, you can participate in the gains of that sector by just purchasing a “grab bag” of stocks through an ETF. These function essentially like a silver ETF or ETF gold investment.
Uranium and nuclear power generation happens to be a sector that is enjoying a rise in demand and underlying prices. There are new and improved technologies that facilitate the exploitation of uranium and nuclear power for the creation of electricity. Nuclear power is experiencing an extra boost as the push for diminished pollution from fossil fuels, such as coal, heightens. Countries as far flung as China, Russia, and India are rapidly expanding infrastructure and placing a greater demand on the power generating resources of the world. Countries such as India and China really don’t have the natural gas resources available or on line to meet their needs. Russia has natural gas, but is leaning towards nuclear power as it wishes to increase gas exports to Europe.
Uranium ETF – Global X Uranium ETF (URA)
An exciting, newer uranium ETF is one that actually focuses directly on uranium. URA launched in the fall of 2010. This ETF contains approximately twenty-three or twenty-four companies involved in uranium at some level of the production cycle. Some companies may be in the exploration phase. Others may be producers. Some may just be in the business of manufacturing equipment used in the uranium mining process.
The fund is anchored to the Solactive Global Uranium, Index. Not surprisingly, about half of the companies are from Canada. About one-third are Australian companies. The United States represents about 15% of the companies. Some of the top holdings are Cameco and Uranium One, which each account for 15% or better of the portfolio. Paladin Resources accounts for about a tenth of the holdings. Denison Mines and Uranium Energy are also well known, and they both make up about five percent of the ETF.
Uranium ETF – PowerShares Global Nuclear Energy Portfolio (PKN)
PKN started back in April of 2008. It is a bit more expensive than RUA. The annual expense ratio is .75%. PKN is tied to the WNA Nuclear Energy Index. This index follows companies that are involved in the nuclear sector. This can include nuclear reactors, basic utilities, nuclear-related equipment, service providers, fuel supplies and suppliers, various technological components, and even construction. This fund contains companies such as Uranium One (also contained in the Global X Uranium ETF), Thermo Fisher, Scientific, Toshiba, and Areva.
Uranium ETF – Market Vectors Uranium and Nuclear Energy ETF (NLR)
NLR represents a bit of “middle ground” between URA and PKN. URA is intended to be more of a pure uranium play. PKN is broader in scope, focusing on nuclear energy in general. While the two can have some overlap, as shown with Uranium One, that is the line of demarcation that distinguishes the two. NLR began in August of 2007. The annual expense ratio is .62%. This particular fund is anchored to the DAXglobal Nuclear Energy Index. The DAXglobal Nuclear Energy Index contains a host of companies that are listed globally and are somehow connected to the nuclear energy industry.
This modified market cap-weighted index is structured heavy on uranium mining itself. Nearly 40% of the companies are uranium miners. About one quarter is companies focused on nuclear generation. The balance have to do with infrastructure, transportation of nuclear fuel, enrichment, and storage. This is what separates NLR from a more pure uranium ETF like URA. Nevertheless, you can find a notable degree of overlap. Indeed, you’ll find uranium staples in NLR such as Cameco and Paladin, just as with URA.
Uranium ETF – iShares S&P Global Nuclear Index Fund (NUCL)
As is often the case with any type of uranium ETF, Cameco makes up a sizeable presence. This is also true with the iShares S&P Global Nuclear Index Fund, or NUCL, which began in June 2008. This fund is cheaper to own than all the rest mentioned, with an annual expense ratio of 0.48%. The reference point for this fund is the S&P Global Nuclear Energy Index. As a result, there are about 25 companies involved in this uranium ETF, on top of Cameco.
