It has been roughly 9 months since the terrible nuclear disaster that occurred in Japan following an earthquake and tsunami, and most investors in the space have had a rather grim outlook for much of 2011.
The nuclear energy/uranium space actually finished 2010 on a high note and continued to surge in early 2011 before the events in Japan unfolded in March of this year.
With all of the nuclear energy and related ETFs currently posting significant losses year to date, we would not be surprised to see opportunistic tax loss harvesting and potential swap trades occur, where investors close out of one fund and immediately get market exposure through another ETF in the same sector.
Currently, NLR (Market Vectors Nuclear Energy) is the largest fund in the sector, with about $107 million in assets under management currently. The fund tracks the DAXGlobal Nuclear Energy Index and current top holdings include EDF (8.43% weighting), EXC (7.82% weighting), and ordinary shares of Mitsubishi Heavy Industries Ltd. (7.22%). NLR is down 32.47% year to date.
PKN (PowerShares Global Nuclear Energy) has lost 24.63% year to date and it tracks the WNA Nuclear Energy Index. Current holdings are AREVA (7.87%), TOSBF (5.61%), and EOAN (3.65%).
iShares also has an entrant in the space, NUCL (iShares S&P Global Nuclear), and this fund has posted a -24.78% return year to date.
The ETF is based on the S&P Global Nuclear Energy Index and has exposure to names including ordinary shares as well as U.S. listed equities, JGC Corp. (8.20%), Mitsubishi Electric Corp. (7.20%), and CCJ (7.16%).
While the aforementioned ETFs invest in equities that derive revenues from businesses that are related to nuclear energy, there is also an ETF which owns companies that are involved in the actual of mining of uranium, URA (Global X Uranium).
Tracking the Solactive Global Uranium Index, URA currently holds CCJ (20.29%), UUU (13.37%), and PDN (8.22%) as its top weightings. With over 40% of the portfolio being spread across only 3 names, URA can be considered “top heavy” as it is reliant on the fortunes of a few names. URA has also experienced a tough 2011, faltering 58.18% year to date.
All of the ETFs mentioned are considerably more liquid than their average daily volumes would indicate, it is simply a matter of dealing with a specialized ETF execution desk that understands how to tap into this liquidity and not be thwarted by lower than desirable average daily trading volumes.
PowerShares Global Nuclear Energy