Uranium ETFs remain strong with growing energy crisis

Uranium prices have jumped by roughly +6% over the past week to reach $46.6/lb. as the Russian invasion of Ukraine puts the spotlight on Nuclear Energy. Russia — which is responsible for 17% of global natural gas production, 12% of oil production, and 40% of Europe’s natural gas imports is hit with severe sanctions that will hinder its ability to export its energy commodities. This includes the recently suspended certification of the Nordstream 2 pipeline connecting Russia and Germany. This has driven commodity prices higher with European gas, UK gas, and Brent oil rising by +47%, 49%, and +7.75% over the past week. 

Nuclear could be crucial to ending Russian dependency

The high dependency on Russian energy commodities and the impact sanctions could have on the energy markets could lead nations, mainly European — to reconsider adding more nuclear to the energy mix. French President Macron has announced in February a “renaissance” for the French nuclear industry with a vast program to build as many as 14 new reactors, arguing that it would help end the country’s reliance on fossil fuels and make France carbon neutral by 2050. Meanwhile, there have been talks that Germany might consider keeping its nuclear plants online considering that the country relies on Russia for 55% of its gas supply. If the Russians close the taps, the EU’s largest economy could find itself in dire straits. 

Sprott Physical Uranium Trust continues with physical uranium stock buildup

In addition to long-term prospects, the Sprott Physical Uranium Trust has purchased over 1.4 million lbs. of physical Uranium on February 26 after adding 500,000 lbs. on February 10. This brings their total purchases in 2022 to 5 million lbs. and their total purchases since launch to 47.49 million lbs. Sprott was one of the biggest buyers of physical uranium in 2021 and helped propel uranium prices to multi-year highs. 

Investors add funds to Uranium ETFs

Uranium ETFs are a great way for investors to gain exposure to the Uranium mining and nuclear energy industry. Last year, investors added $1.55 billion to Uranium ETFs as prices of the radioactive material rose by 42%. The four recipients Global X Uranium ETF (URA), North Shore Global Uranium ETF (UNRM), VanEck Vectors Uranium + Nuclear Energy ETF (NLR), and Horizons Global Uranium Index ETF (HURA) ended the year with returns of +57%, 79%, +14%, and +79% respectively. While the performance is far from stellar in 2022, the funds remain popular — receiving an additional $200 million from investors.

Largest Uranium ETF continues to grow

URA ETF, the largest Uranium ETF with $1.29 billion in assets, witnessed net inflows of $133 million year-to-date (as of February 24). The fund seeks to track the Solactive Global Uranium & Nuclear Components Total Return Index and invests in companies involved in uranium mining and the production of nuclear components, including those in extraction, refining, exploration, or manufacturing of equipment for the uranium and nuclear industries.

In terms of country exposure (as of January 31st), Canada has the lion's share (48.5%), followed by Australia (14.7%), Kazakhstan (9.4%), South Korea (6.6%), and the United States (5.9%).  Energy has the highest sector allocation (63%), followed by Industrials (16.9%), and Materials (15.6%).

The top 10 names (51 in total) represent 60% of the total portfolio (as of February 25th) and include Cameco corp. (23.03%), Sprott Physical (6.61%), NAC Kazatomprom JSC-GDR (6%), NexGen Energy Ltd. (5.68%), and Paladin Energy Ltd. (4.13%), to mention a few.

The fund has a total expense ratio of 0.69% and trades primarily on the NYSE Arca. Since its inception on November 4th, 2010, URA has generated a cumulative loss of -72.6% (as of January 31st).

Find and compare over 8,000 ETFs with our free tools:  

• ETF Screener
• ESG Investing
• Thematic Investing
• Fixed Income Investing

Interested in seeing lists of top-performing ETFs? Check out our new Investing Guides:

• Investing in Gold ETFs
• Investing in Silver ETFs
• Investing in Commodity ETFs
• Investing in Oil ETFs
• Investing in ESG ETFs