Global support continues to mount for nuclear energy as public attitudes shift in its favor. In turn, this improves the prospects for uranium miners, opening investment opportunities in ETFs.
“On an individual level, sentiment toward nuclear energy continues to improve, with a study finding that 1.5X more people support nuclear energy’s use than oppose it,” noted Jacob White, ETF product manager at Sprott Asset Management, noting data from the Radiant Energy Group.
According to the findings, the Public Attitudes Toward Clean Energy (PACE) index showed a 46% global support rate for nuclear energy in 2023. More importantly, nuclear energy came second to electricity as the most preferred source of clean energy.
This data corroborates with the increasing number of countries looking to nuclear energy as a viable alternative energy source. This is sparking interest in more uranium mining projects, which was supported by a Yale University study.
Figure 2. Public Attitudes Toward Nuclear Energy in 2023
Source: Radiant Energy Group
2 Uranium Mining ETF Options
The growth potential of uranium mining makes the Sprott Uranium Miners ETF (URNM) an intriguing play. The fund offers exposure to other companies involved in the mining and exploration of uranium, thereby eliminating the concentration risk typically associated with holding a single stock. As such, URNM offers diversification for investors seeking to capture the upside growth that uranium brings.
URNM tracks the North Shore Global Uranium Mining Index. It invests in global firms that mine, develop, and produce the metal. It also invests in firms that hold the physical metal or royalties from it. The fund is an ideal pathway for investors to get exposure to rising prices of the element. It also provides a portfolio diversification tool, allowing uranium exposure without investing in the commodity itself.
Those seeking additional growth can look to the the Sprott Junior Uranium Miners ETF (URNJ). Its small-cap growth focus can expose investors to amplified moves that complement the bullishness in uranium prices. As opposed to building a small-cap uranium mining portfolio of individual stocks, URNJ is a simpler solution.
Potential Amplified Moves to the Upside
URNJ tracks the total return performance of the Nasdaq Sprott Junior Uranium Miners Index, which tracks an assortment of mid-, small-, and micro-cap companies. According to ETFdb data, the fund has a beta coefficient index of over 2 (versus URNM’s 1.42 beta coefficient), giving it a riskier profile typically associated with small-cap stocks, but as mentioned, this could also translate to amplified moves to the upside.
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Past performance is no guarantee of future results. One cannot invest directly in an index. Funds that emphasize investments in small/mid-cap companies will generally experience greater price volatility. Diversification does not eliminate the risk of investment losses. ETFs are considered to have continuous liquidity because they allow an individual to trade throughout the day. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses, affect the Fund’s performance.
Sprott Asset Management USA, Inc. is the Investment Adviser to the ETFs. ALPS Distributors, Inc. is the Distributor for the ETFs and is a registered broker-dealer and FINRA Member. ALPS Distributors, Inc. is not affiliated with Sprott Asset Management LP or VettaFi.
Exchange Traded Funds (ETFs): SETM, LITP, URNM, URNJ, COPP, COPJ, NIKL, SGDM and SGDJ
