ETF 360: Sprott's Uranium Pure Play

On the latest episode of “ETF 360,” VettaFi Head of Research Todd Rosenbluth interviewed Sprott’s Steven Schoffstall. The two discussed the Sprott Uranium Miners ETF (URNM).

The Uranium Bull Market

Schoffstall said that he believes there is a bull market in uranium right now, adding, “One of the things that we see is growth in energy demand.” Looking at demand for energy from 2021 through projected needs in 2050, he said there will be a 76% increase in electricity needed just to power the world as it is today.

“We see a lot of that coming from emergence of new technologies,” Schoffstall noted. Higher standards of living in the developed world and an emerging middle class in the developing world could also increase demand.

There is also a growing global acceptance of nuclear power. Schoffstall noted that there are roughly 435 nuclear power plants already online. He sees China alone as likely adding 150 over the next decade and a half.

Energy Security and the Clean Energy Pivot

Another driver of the nuclear bull market is energy security. Schoffstall observed, ”With the Russian invasion of Ukraine, that’s really something that’s taken center stage.”

The global pivot toward clean energy is also gaining momentum. Accordingly, this could provide an invaluable tailwind for nuclear power. Countries around the world are seeking to reach zero emissions as the climate crisis worsens. “What we’re seeing is countries now realizing that solar and wind might not be the only way to get us there,” he said.

Nuclear power is efficient in addition to being clean. “We could power the entire U.S. with 470 miles of nuclear infrastructure,” Schoffstall explained, adding, “if you’re trying to do the same with solar power alone, you’re looking at an area the size of South Carolina.” For wind power, it would be something closer to Montana.

Uranium Miners

URNM has roughly $1.3 billion in AUM. “It’s really become a bellwether in the uranium miner space for investors looking to gain exposure to uranium miners,” he said. He noted the fund has over 80% of its assets in pure-play uranium miners, with the remainder invested in physical uranium.

Many uranium funds invest in companies that are further downstream. URNM stands apart as a pure play, according to Schoffstall. “We believe being up front, and at the beginning of the supply chain is the place to be.”

To watch past episodes of ETF 360, visit the ETF 360 Channel