Top ESG ETFs of the month: Uranium & Japan ETFs

In September 2021 Uranium ETFs and Japan ETFs climb the ladder as the top ESG ETFs based on performance. Below we explain why and how these ESG ETFs made the list.

Physical Uranium buying spree lifts Uranium ETFs

Uranium ETFs ended September as the top performing ESG ETFs with North Shore Global Uranium Mining ETF (URNM), Horizons Global Uranium Index ETF (HURA) and Global X Uranium ETF (URA) gaining +22.09%, +20.93% and +12.23% respectively. In addition, they witnessed a combined inflow of more than $400 million in September alone.

During the month, the three Thematic ESG ETFs shined as Uranium prices soared from $34.6/lb to $43/lb while breaching the $50/lb mark at some point. The rally was fueled by Sprott Physical Uranium Trust's buying spree initiated on August 17. The trust added over 10 million pounds of physical Uranium to their portfolio since then and now holds over 29 million pounds overall.

Japanese ETFs gain momentum on leadership change

Japanese ETFs were one of the top performers this month as leadership change spread optimism in the markets. In early September, Prime Minister Yoshihide Suga announced his resignation amid criticism of his reign during the pandemic. On September 29, Japan's ruling Liberal Democratic Party (LDP) anointed his successor, former foreign minister Fumio Kishida as its new leader. Kishida will become premier at a parliamentary session on October 4th because of the LDP's majority in the lower house.

The change in Japan's upper management was well received by local and foreign investors. In the ETF space Japanese Equity ETFs witnessed around $2.5 billion in net flows, lifting several Japanese ESG ETFs to our September's top performing ESG ETFs list.

Among the top 10 were Lyxor MSCI Japan ESG Leaders Extra (DR) UCITS ETF (JPXY), WisdomTree Japan Equity UCITS ETF (DXJA) and HSBC Japan Sustainable Equity UCITS ETF (XU8Z), gaining +4.85%, +4.71% and +3.76% respectively and outperforming the Nikkei 225 index (+3.16% in USD terms).

MSCI Europe Energy ESG ETF rises on surging energy commodity prices

Xtrackers MSCI Europe Energy ESG Screened UCITS ETF (XSER) by provider DWS gained +8.68% in September on rising energy commodity prices. The fund invests in large and mid-cap energy companies in Developed European countries by tracking the MSCI Europe Energy ESG Screened 20-35 Index. Surge in oil and gas demand during September amid low supplies pushed prices higher with Natural Gas (Henry hub) Brent Oil futures gaining +34.04% and +7.58% respectively.

The index follows an exclusion screening ESG strategy and leaves out companies associated with controversial industries (civilian weapons, military defence weapons, nuclear weapons, tobacco) and companies that derive revenues from thermal coal or oil sands extraction. All securities with an assigned MSCI ESG Rating of 'CCC' or are unrated are also excluded.

The ETF top holdings include Total Energies (27.76%), BP PLC (16.38%), ENI (14.45%), Equinor ASA (10.66%) and Nestle Oil (10.27%).

Top 10 ESG ETFs of the month: Uranium and Japan ETFs

• North Shore Global Uranium Mining ETF: +22.09%
• Horizons Global Uranium Index ETF: +20.93%
• Global X Uranium ETF: +12.23%
• Xtrackers MSCI Europe Energy ESG Screened UCITS ETF: +8.68%
• Lyxor MSCI Japan ESG Leaders Extra (DR) UCITS ETF: +4.85%
• WisdomTree Japan Equity UCITS ETF: +4.71%
• HSBC Japan Sustainable Equity UCITS ETF: +3.76%
• UBS ETF MSCI Japan Socially Responsible UCITS ETF: + 3.57%
• KraneShares Global Carbon ETF: +3.37%
• UBS (Irl) ETF plc – MSCI Japan Climate Paris Aligned UCITS ETF: +3.25%

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