In a topsy-turvy year defined by a broad market selloff amid geopolitical and rising rate uncertainty, energy has been one of the sectors to stand out. With costs on the rise and Russia’s invasion of Ukraine disrupting global supply chains, governments are revisiting nuclear energy, presenting an opportunity for investors to tax loss harvest out of the sell off into some interesting uranium opportunities with a uranium ETF like the Sprott Uranium Miners ETF (URNM).
As the need for fossil fuel alternatives to combat climate change grows, nuclear energy is also increasingly seen as a green option on top of an energy source. It’s true that while certain uranium investments have done well relative to certain broad equity indexes this year, they’ve still been impacted by the sell-off — allowing interested investors to realize losses while keeping exposure to an interesting sector.
Because of the wash-sale rule, investors may be looking to shift their allocations from other areas, as they cannot reinvest funds from selling securities into areas that are substantially similar to the original securities. That presents an opportunity for uranium exposures in an ETF like URNM.
URNM tracks the North Shore Global Uranium Mining Index, providing access to a global basket of firms involved in mining, development, and production of uranium. The uranium ETF identifies those firms via industry publications review, sell side and fundamental research, with identified securities then bucketed into two categories, miners and holders.
The categories are weighted based on market cap within their category, with the index reconstituted and rebalanced quarterly. URNM has added $4 million in net inflows over the last one month, with its performance rising recently as well. The ETF saw an improvement of 1300 BPS in its returns when comparing its one month returns to its three-month returns.
URNM charges an 85 basis point fee, offering an annual dividend yield of 1.11%. For those investors looking to tax-loss harvest into a new category that could benefit from some important trends in the new year, URNM could be one to keep an eye on.
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