Nuclear Energy ETFs Powering Up
February 6th, 2014 at 1:56pm by Max Chen
The nuclear sector has languished after the fallout from Japan’s Fukushima Dai-Ichi disaster, but nuclear-related exchange traded funds are powering back up on a revival in atomic energy.
Nuclear energy is turning around as Analysts project that one in every five of Japan’s reactors will restart this year and China plans to quadruple its nuclear capacity by 2020, reports Eric Balchunas for Bloomberg.
Jonathan Hinze, a senior vice president at Ux Consulting Co., expects the slowing supply of uranium and higher demand could lead to price gains this year.
Nevertheless, public opinion on nuclear energy safety is still a major consideration, and opposition could halt plans to expand or restart nuclear reactors.
Investors interested in gaining exposure to the sector can look at ETFs that target uranium mining or nuclear energy stocks.
The Global X Uranium ETF (NYSEArca: URA) follows the 23 global uranium mining companies, with a 60% weight toward Canada, 20% in Australia and 11% in the U.S. The fund is a little top heavy as it includes a 23.5% allocation toward Cameco Corp. and leans toward small- and micro-cap names, which include 32.7% and 30.8% of holdings, respectively. URA has gained 6.8% over the past three months but is down 28.4% over the past year. The ETF has a 0.69% expense ratio. [Uranium ETF is Looking Hot]
The Market Vectors Uranium+Nuclear Energy ETF (NYSEArca: NLR) takes a broader approach, including exposure to large and more stable utilities companies at about 32.6% of the portfolio. Additionally, the ETF leans toward larger companies, with a 22.4% weight toward mega-caps, 46.2% in large-caps and 19.9% to small-caps. Japan makes up the largest country allocation at 24.4%, followed by France 21.7%, U.S. 20.5%, Canada 13.7%, Poland 9.9% and Australia 9.8%. NLR is up 0.6% over the past three months and increased 11.5% over the past year. The fund has a 0.6% expense ratio.
Finally, the iShares Global Nuclear Energy ETF (NYSEArca: NUCL) tracks 24 of the largest nuclear sector companies – mega-caps make up 25.3%, large-caps 58.9% and mid-caps 14.1%. This ETF focuses more on nuclear facilities and the equipment needed for powering reactors, with a 47.7% allocation to electric utilities and 13.4% to multi-utilities. The U.S. is the largest country component at 39.8%, followed by Japan 27.6%, Canada 5.9%, Spain 4.9% and Germany 4.9%. NUCL is down 2.9% over the past three months and up 11.3% over the last year. The ETF has a 0.48% expense ratio.
For more information on the nuclear sector, visit our nuclear category.