Uranium and Nuclear ETFs radiate on energy crunch

Uranium futures reached $54 per pound, the highest since September of 2011 after nuclear energy made headlines as a potential gateway to end future energy commodities dependence on Russia. As tensions flare between Russia and the West, the Kremlin signed a decree that will include a ban on raw material exports, raising concerns about US uranium imports. The US nuclear energy sector represents 20% of the nation's energy mix and relies on Russia for 16% of its imports (source eia.gov). On the demand side, soaring fossil fuel prices led utilities to search for cheaper alternatives. In Asia, South Korea elected a new, pro-nuclear President, boosting nuclear energy-related stocks in the country, and strengthening uranium’s demand prospects. (tradingeconomics.com). Elsewhere, the IEA released a report on how Europe could reduce its dependency on Russia for energy imports, which mentioned maximizing production at existing nuclear facilities.

The basket of factors has formed a strong catalyst for the nuclear industry both for the short term and the long term. Investors interested to jump on board a potential nuclear "renaissance" can explore uranium and nuclear energy exchange-traded funds (ETFs).

Uranium and Nuclear Energy ETFs gain traction

Uranium ETFs attracted over $255 million of net inflows in the past three weeks. The Global X Uranium ETF (URA) netted $181 million and North Shore Global Uranium Mining ETF (URNM) received $74 million. Meanwhile, the VanEck Vectors Uranium+Nuclear Energy ETF (NLR) and Horizons Global Uranium Index ETF (HURA) received minor inflows (<$3 million) over the same period. UNRM, URA, and HURA provide exposure to companies involved in uranium mining and/or the production of nuclear components, including those in extraction, refining, exploration, or manufacturing of equipment for the uranium and nuclear industries. HURA also invests in companies investing and participating directly in the physical price of uranium. Meanwhile, NLR provides a broader exposure to the nuclear industry (utilities > 83%) and has less exposure to the Uranium mining sector compared to its peers.

Since February 24th, 2022, URA, HURA and URNM share prices have gained +24%, +25%, and +31% respectively. NLR's shares trailed with smaller gains of +6.4%.

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