Will Current Affairs Deter Interest In Nuclear ETFs?
March 14th, 2011 at 11:35am by Tom Lydon
As the problems at Japan’s nuclear power plant continue to unfold, more eyes are starting to place greater scrutiny on the nuclear industry, which may put pressure on nuclear-related exchange traded funds (ETFs).
Nuclear energy demand is soaring. Perhaps not so much in the United States, where the sector is still struggling to shake off a stigma. But in certain overseas markets, nuclear energy is the future. Nuclear energy already produces about 16% of the world’s electricity.
Energy costs are on the rise, and as we’ve often seen in the past, oil prices and interest in alternative energy tend to move in tandem. One pound of uranium can generate as much energy as 20,000 pounds of coal. Demand is expected to grow by 33% over the next decade, while nuclear reactor capacity is forecast to grow 27%. Depending on the outcome of Japan’s nuclear plants, this forecast might change. [Uranium ETF: Demand Grows Unabated.]
Still, environmentalists have been concerned over possible reactor meltdowns that could result in an explosion and release of radioactive materials into the atmosphere. But, technological advances and safety measures have been taken to obviate such a situation. Additionally, there is concern over the storage of spent nuclear rods and other leftover radioactive materials. The current focus on nuclear plants in Japan certainly brings all of the issues to the forefront. Speaker of the House, John Boehner, said today that there sill be meetings this week to discuss the Japanese nuclear poer plant situation and the potential for similar catastrophes here in the U.S.
- PowerShares Global Nuclear (NYSEArca: PKN) Invests in globally traded companies in the nuclear energy industry with representation across reactors, utilities, construction, technology, equipment, service providers and fuels. It has thin volume due to the internationally listed components.
- Market Vectors Nuclear Energy (NYSEArca: NLR) The most active of the nuclear ETFs with almost 100,000 shares traded daily. It invests in equity securities of U.S. and foreign companies that generate at least half of their revenues directly from the nuclear energy business. Both NLR and PKN have the United States, Japan and Canada as top countries, with the United States being the top nation in both.
- iShares S&P Global Nuclear Energy (NYSEArca: NUCL) This fund has thin volume with only a few thousand shares traded each day, and touches on a global market. NUCL gives Japan the biggest weighting, followed by the United States and Canada.
- Global X Uranium (NYSEArca: URA): URA is the ETF industry’s first uranium-focused fund. It gives exposure to a global uranium miners, refiners and equipment makers. Nuclear energy accounts for half of uranium’s use.
For more information on the nuclear industry, visit our nuclear energy category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.