Exchange traded funds (ETFs) that track the nuclear energy sector are in the middle of a power surge that may make them an appealing niche to consider.
A couple things are propelling the nuclear ETFs to 52-week highs and why investors find the sector attractive:
- 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, says John Ogg for Investor Place. Nuclear energy already produces about 16% of the world’s electricity. [Nuclear ETFs Are Picking Up Steam.]
- Energy costs are on the rise. Oil is back around $88 a barrel, and as we’ve often seen in the past, oil prices and interest in alternative energy tend to move in tandem. Nuclear energy is simply cleaner: one pound of uranium can generate as much energy as 20,000 pounds of coal.
Brenden Conway for The Wall Street Journal reports that for two sessions, investors have been rushing after contracts in uranium producers and the action has been dominated by bullish bets that the stocks will stage notable gains in the next few months. [Investing In Energy With ETFs.]
There are now four ways to get your nuclear energy fix with ETFs. Some of these ETFs are on the smaller side, so you may need to work any trades in small increments to avoid throwing off the price. All three funds are perched well above their long-term trend lines, so compare, contrast and take your pick:
- 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. Average volume is less than 6,000 shares a day.
- 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 very thin volume with only a few thousand shares traded each day, and touches on a global market. NUCL gives Japan the biggest weighting, at nearly 30% of the fund. The United States is 22.2% and Canada is 12.7%.
- 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.
Tisha Guerrero 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.