Nuclear Energy ETFs – Ways to play the energy source

Intro to nuclear energy

Nuclear energy is a form of energy that comes from the splitting of atoms in a reactor in order to heat water into steam, which subsequently powers turbines and generates electricity. This form of energy is consistent, un-hampered by interruptions, and able to withstand extreme weather conditions.

However, there are some controversies, especially given that nuclear technology is also used as a devastating weapon. Furthermore, there has been a lot of attention on several nuclear meltdowns that have caused irreparable damage, injuries, and deaths such as the Chernobyl nuclear disaster and the Fukushima nuclear disaster.

It is important to note that uranium is the main input used in the nuclear fission process to produce nuclear energy. Therefore, if nuclear energy is more widely adopted – one of the main beneficiaries will be uranium producers.

Why invest in nuclear energy?

Despite the controversies, nuclear energy does provide many advantages as an energy source, including the following:

• Energy independence – the countries that can scale nuclear power efficiently will no longer rely on oil and gas as a dominant source of energy. This removes the leverage that the oil giants of OPEC+ have over the world’s primary energy source.
• Eco-friendly – the power generation that comes from nuclear energy is carbon-free, efficient, and highly scalable. This is very important in the pursuit of protecting the environment from greenhouse gas emissions.
• Reliability – nuclear energy, unlike other clean sources of energy such as wind and solar, is much more reliable in producing energy consistently no matter the weather conditions.

Despite the advantages, many would argue that nuclear power plants are not economical to construct without government subsidies, especially compared to the current low-cost sources of energy stemming from fossil fuels.

There is also a concern around nuclear waste disposal, and the ability to dispose of the waste safely, and economically. However, in some markets, nuclear waste is a relatively more economical energy source given its lower system costs despite higher upfront capital costs. 

In the future, government support may swing more towards providing subsidies for nuclear energy capacity. Those who wish to benefit from the wider adoption of nuclear energy may want to invest in a low-cost, highly liquid, and diversified manner which ETFs can provide.

Nuclear Energy ETFs: Examples

Nuclear Energy ETFs are funds that provide exposure to the wider embracement of nuclear energy as a power source. If nuclear energy does become a more widely used energy source, Nuclear Energy ETFs would be expected to outperform. Some examples of Nuclear Energy ETFs include:

URA (Global X Uranium ETF)

• AUM: $1.4B
• Expense Ratio: 0.69%
• YTD performance: -15.1%

URNM (Sprott Uranium Miners ETF)

• AUM: $776.9M
• Expense Ratio: 0.85%
• YTD performance: -17.6%

NLR (VanEck Vectors Uranium + Nuclear Energy ETF)

• AUM: $45.8M
• Expense Ratio: 1.25%
• YTD performance: -3.8%

Data for this article is as of July 11th, 2022.