3 Uranium ETFs That Pack a Nuclear Punch

Those assets have soared in recent years, mind you – URA claimed just over $100 million in AUM during the COVID lows before gobbling up assets in more recent years. It’s a small field – these are three of the most pure-play funds in the space, and they still collectively represent just over $5 billion in assets. But the best ETFs in the uranium space can provide a few different types of exposure to this rocketing commodity. Uranium is primarily used as fuel to power the nuclear fission plants that produce about 10% of the world’s electricity.

Shares of Uranium Companies

Launched in July 2021, the Sprott Physical Uranium Trust quickly made its mark on the space, stoking investor interest and prices for the commodity. This fund has an expense ratio of 0.72 percent and a yearly return of 96.73 percent. The Sprott Uranium Miners ETF includes both uranium producers and explorers for broader exposure.

There is no commodities market for the radioactive mineral so investors who want to profit from uranium’s rise have to invest in stocks and exchange-traded funds. That’s an attractive proposition to bet on if you’re willing to stomach the risks that small-cap stocks bring along. The recent launch of the world’s largest physical uranium exchange-traded fund (ETF), the Sprott Physical Uranium Trust Fund (SRUU.F -2.03%) has been an even bigger catalyst.

Advanced Stock Screeners and Research Tools

Nuclear power plant meltdowns are incredibly rare, and the risks are declining as technology races to meet the science. But when they do happen, they can be catastrophic – and lead to substantial policy changes. Just look at what’s happening with Bitcoin as its halving event approaches. When the supply of any asset is cut with demand staying the same or increasing, the underlying asset’s price has only one direction to go. The company positions itself as “The First and Only Pure Play Uranium Royalty Company.” By this, it is the first company with a royalty and streaming business model exclusive to the uranium sector.

1. As the need for clean energy grows and uranium oversupply diminishes, demand for the energy fuel is likely to grow.
2. Open pit mining usually produces ores with less than 0.5% uranium content, and the mining methods works only with minerals located less than 400 feet below the surface.
3. Following the Fukushima disaster, the price of uranium – the crucial ingredient of nuclear power – plummeted.
4. UEC stock is up 102% in the last 12 months despite the sharp drop in uranium prices in early 2024.
5. And as the number of units it sells rises, it’ll have to buy as much of the underlying commodity — which is uranium in its case — to hold against those units.
6. Yields represent the trailing 12-month yield, which is a standard measure for equity funds.

The fund has an expense ratio of 0.83 percent and a yearly return of 50.34 percent. As I hinted earlier, the Sprott Fund has had a major role to play in the recent rally in uranium prices as it’s been buying uranium aggressively from the spot market ever since its launch in July. As of Nov. 26, the fund had accumulated nearly 41 million pounds of uranium, versus only 18.3 million pounds on July 31. With Cameco also ending the third quarter with solid financials including $1.4 billion in cash versus only $1 billion in debt, I think Cameco stock is a solid buy right now. “I do feel as though we’re in year three of this cycle,” said John Ciampaglia, CEO of Sprott Asset Management.

Factors such as company management and the overall stock market can affect these trades. There are many publicly traded companies that mine, process and sell uranium. Futures are a derivative instrument through which traders make leveraged bets on commodity prices. If prices decline, traders must deposit additional margin in order to maintain their positions.

As a result, the global nuclear power industry ground to a screeching halt – and dragged the uranium industry with it. Although uranium prices are widely believed to be on a long-term upswing, risks of uranium investing remain. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74%-89% of retail investor accounts lose money when trading CFDs.

It represents an emissions-free alternative to fossil fuels how are capital positive aspects taxed while also being more reliable than renewable energy sources such as wind and solar. Finally, if you really want to play any rally in spot uranium prices, buying units of the Sprott Physical Uranium Trust Fund is your best bet. As the world economy expands, demand for power should grow, and uranium prices should respond favorably. New cities will require increasing amounts of electricity to power businesses and homes. As more countries seek to curb pollution while meeting energy demand, nuclear power demand could grow. CFDs allow traders to speculate on the price of companies involved in the uranium industry.

As a result, uranium has become an increasingly valuable commodity in world markets. The uranium ETF’s top five holdings are rounded out with Canada’s NexGen Energy, as well as Australian production firm Paladin Energy (PALAF). Working with an adviser may come with potential downsides such as payment of fees (which will reduce returns). There are no guarantees that working with an adviser will yield positive returns.

Investing in uranium allows investors to participate and potentially profit from a perceived global shift toward nuclear power driven in part by concerns about global warming. Uranium can’t be traded like other commodities, but investors can purchase shares in a number of public companies involved in mining, processing and trading the mineral. Exchange-traded funds that invest in baskets of uranium- and nuclear-related companies provide a convenient way to acquire a diversified uranium portfolio. There is also increasing demand for uranium from China and India as both these countries grapple with air pollution in the face of growing electricity demand. China is working to expand its nuclear power capacity, and although it ranks among the top 10 uranium-producing countries, it relies heavily on uranium imports.

Investing Tips for Beginners

The price of uranium is likely to be influenced heavily by trends in nuclear power usage for electricity generation. The World Nuclear Association projects a 30% increase in electricity generation from nuclear power by 2030 and a 35% increase by 2035. Futures are an important part of the market as there is currently no exchange-listed, transparent price instrument that consumers and suppliers can use to manage prices and risks. Furthermore, uranium futures provide investors with a marketplace for direct exposure to the price of uranium.

Investing News NetworkYour trusted source for investing success

Underground mining is expensive and can cause serious damage to local aquifers. As with surface mines, ore yields are typically less than 0.5% uranium. Underground mines have a smaller environmental footprint than open pit mines and produce less waste rock. In addition, better ventilation systems and robotic mining techniques have improved the safety of newer underground mines.

New hope for nuclear

You should consider whether you can afford to take the high risk of losing your money. With many major nations rethinking their approach to clean, affordable energy, nuclear power plants are an obvious option. That’s good news for uranium investors, as more nuclear power means more demand for the radioactive metal.

The Horizons Global Uranium Index ETF, created in 2019, was the first pure-play uranium ETF in Canada and provides exposure to uranium industry growth. The fund has an expense ratio of 0.99 percent and a yearly return of 58.9 percent. The Global X Uranium ETF tracks a basket of uranium miners, as well as nuclear component producers. The fund has an expense ratio of 0.69 percent and has achieved a yearly return of 39.33 percent. After years of dormancy, the uranium spot price zoomed past the US$100 per pound level in early 2024 on supply risks and a strong outlook for long-term demand. Although it’s since pulled back, bulls believe it still has room to run.