VanEck Launches New Uranium & Nuclear Technologies UCITS ETF

Investors bullish on the alternative energies thematic megatrend now have a new way to express their views courtesy of VanEck. The firm recently launched the VanEck Uranium and Nuclear Technologies UCITS ETF (NUCL) on the LSE as the latest addition to their expanding lineup of thematic ETFs. 

Investor interest in the nuclear energy industry along with base input materials like uranium has seen a resurgence after the U.S. Department of Energy (DOE) announced the achievement of fusion ignition at Lawrence Livermore National Laboratory (LLNL) on December 12th, 2022. Let's break down the case for investing in the nuclear industry and see what NUCL has to offer investors. 

The bull case for nuclear energy investing

With governments around the world setting ambitious targets for reducing greenhouse gas emissions and increasing the proportion of energy generated from low-carbon sources, nuclear energy is being seen as a crucial contributor to clean-energy generation. 

According to the World Nuclear Association, the global nuclear energy industry is expected to grow at an average annual rate of 2.4% between 2021 and 2040, with the total installed capacity of nuclear power expected to increase from 392 gigawatts in 2021 to 535 gigawatts by 2040. 

Furthermore, the demand for nuclear energy is expected to drive growth in the uranium industry, as uranium is a key raw material for nuclear fuel. According to the World Nuclear Association, the demand for uranium is expected to increase from 190 million pounds in 2021 to 235 million pounds in 2040. 

Hence, the increased demand for clean energy could drive up the price of uranium, which would in turn benefit uranium producers and uranium-focused mining companies. With growth expected in both the nuclear energy and uranium industries, investing in these sectors can be a compelling opportunity.

Analyzing NUCL

NUCL tracks the unique MarketVector Global Uranium and Nuclear Energy Infrastructure Index (MVNUCLTR), which holds 25 of the largest and most liquid global companies involved in both the nuclear energy and uranium mining industries.

Companies in NUCL's portfolio must derive at least 50% of their revenues from uranium mining or nuclear infrastructure. These categories can include mining exploration & development, facility construction, molten salt reactors, nuclear fusion, engineering, maintenance, or related equipment, technology, and services. 

Holdings in NUCL must also satisfy minimum market cap requirements of $150 million, with sufficient trading volume of 250,000 shares each month over last 6 months and a three-month average daily turnover greater than $1 million.

The ETF's weighting methodology caps the largest holding at 15% of the ETF's total net assets, the second largest at 10%, and all other companies at 8%. Finally, the index is rebalanced quarterly. NUCL currently charges a 0.55% total expense ratio.

As of February 9th, Canadian equities comprise 33.13% of the ETF, with the world's largest publicly traded uranium company, Cameco Corporation (CCO) currently sitting at 18.84%. Japanese equities sit at 30.34%, and U.S. companies round out the remaining 30.07%. 

Since its launch on February 3rd, 2023, NUCL has already attracted net assets of $4.9 million. While the ETF's performance history is too short to evaluate, the underlying MVNUCLTR index has returned 23.56% over a one-year period as of January 31st, 2023. 

*IMPORTANT: The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Trackinsight. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A FINANCIAL PROFESSIONAL IS STRONGLY ADVISED.