Exchange-traded funds (ETFs) can be a great way to get exposure to a specific industry or strategy. For investors interested in the nuclear space, the three main ETFs to consider are: Global X Uranium ETF (URA 2.60%), VanEck Vectors Uranium+Nuclear Energy ETF (NLR 3.40%), and North Shore Global Uranium Mining ETF (NYSEMKT:URNM). And while they all provide a form of nuclear exposure, they do not provide the same exposure. Here is an overview of each.
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Global X Uranium ETF (URA)
URA is the largest of the three ETFs in terms of market capitalization at around $180 million. It tries to give "investors access to a broad rand of companies involved in uranium mining and the production of nuclear components." It contains about 30 companies with an average market cap of $14 billion. Most of them are large mining, industrial, or engineering/construction companies with operations in nuclear or uranium. The two largest holdings are Cameco (CCJ 1.84%) at 18% and Uranium Participation Corporation (OTC:URPTF) at 7%. The total expense ratio for the fund is 0.69%.
VanEck Vectors Uranium+Nuclear Energy ETF (NLR)
The objective of NLR is to invest in "companies involved in: (i) uranium mining…(ii) the construction, engineering and maintenance of nuclear power facilities and nuclear reactors; (iii) the production of electricity from nuclear sources; or (iv) providing equipment, technology and/or services to the nuclear power industry." The fund has total net assets of $23 million. It has a gross expense ratio of 0.85%, and net expense ratio of 0.60%. It consists of 25 companies of mostly utility companies that operate nuclear power plants. The two largest holdings are Dominion Energy (D 0.61%) and Duke Energy (DUK -0.04%), and together, they make up about 16% of the fund.
North Shore Global Uranium Mining ETF (URNM)
URNM is the newest of the three having just been created in early December 2019. As a result, it is probably not a surprise that it is also the smallest with only $2.5 million in net assets. The focus of this ETF is "to track the performance of companies that are involved in the mining, exploratioin, development, and production of uranium, as well as companies that hold physical uranium or other non-mining assets." It has 26 holdings ranging from large-cap miners to microcap ones. Similar to URA, Cameco and Uranium Participation Corporation are two of the three largest positions. The second largest is Kazatomprom, a uranium miner in Kazakhstan. The expense ratio for this fund is 0.85%.
Which ETF is best?
The answer to this question largely depends on the needs of the investor. For investors who want to benefit from overall growth in the nuclear industry, URA and URNM are probably the best fit. NLR would be best for investors who want exposure to utilities that produce electricity from nuclear power plants. For exposure to uranium mining and the price of uranium, URNM is the best option. NLR, on the other hand, would likely be a poor choice for that given that if uranium prices increased, then costs to those utility companies should rise as well. For investors that need to invest in a larger ETF or one with large-cap holdings, URA and NLR should be considered.
As you can see, there is not one best ETF for the nuclear space. They each have their strengths and weaknesses. To ensure that you get the exposure that you want, make sure that you do your research and pick the one that best meets your needs.
