URA Outpaces Oil & Solar ETFs Amid Middle East Tensions
- The Global X Uranium ETF (URA) has gained 35% year to date versus oil's 6.2%.
- The United States Oil Fund (USO) has seen $73.7 million in outflows amid recent oil-price volatility.
- The Invesco Solar ETF (TAN) trails with 5.6% returns as investors seek energy alternatives.
Nuclear energy funds are delivering the strongest performance among major energy sectors while experiencing investor outflows, with the Global X Uranium ETF (URA) posting a 35% year-to-date return alongside $554.7 million in redemptions, according to FactSet data.
The performance gap highlights a disconnect between strong sector returns and investor behavior across energy ETFs as Middle East tensions upset oil markets. The United States Oil Fund LP (USO) has attracted net outflows of $73.7 million year to date despite posting 6.2% gains, while all three major energy funds experienced net redemptions.
Oil prices fell more than 2% Monday on reports Iran wants to end hostilities with Israel, according to CNBC. The conflict drove oil's largest single-day jump since March 2022 last Friday, with crude prices surging 13% for the week after Israeli airstrikes targeted Iran's energy infrastructure.
The swings in the oil market raise questions about how other energy investments are faring, with nuclear and solar funds showing vastly different results than traditional oil bets.
The nuclear sector's outperformance amid heavy outflows illustrates the disconnect between returns and investor flows, even as President Donald Trump's administration pushes nuclear power expansion and Middle East tensions underscore energy security concerns.
URA: Nuclear ETF Leads Performance Despite Outflows
URA has generated 51.2% returns over three months, according to FactSet data. The fund tracks companies involved in uranium mining and nuclear component production, holding positions in Cameco Corporation (CCJ) (22.8%) and Oklo Inc. (OKLO) (6.5%).
The $3.6 billion uranium fund represents the largest assets under management among the three energy ETFs compared, though it carries a 0.69% expense ratio. The fund tracks companies involved in uranium mining and nuclear component production, with its index reconstituted semi-annually, according to FactSet data.
USO is structured as a commodities pool holding predominantly short-term NYMEX futures contracts on WTI crude oil, with $982.2 million in assets under management. The fund's 0.6% expense ratio is the lowest among the three ETFs, according to FactSet.
USO posted an 18.7% one-month gain while recording $73.7 million in year-to-date outflows. The fund holds 53.8% cash positions alongside 43.4% futures contracts, according to FactSet.
Solar Sector Lags Energy Alternatives
Solar investments trail both nuclear and oil returns, with the Invesco Solar ETF (TAN) posting 5.6% year-to-date gains. The fund tracks global solar energy companies selected based on revenue from solar-related business, holding First Solar Inc. (FSLR) (12.5%) and Nextracker Inc. (NXT) (12.3%) as top positions.
TAN recorded $193.6 million in year-to-date outflows from its $614.8 million asset base, according to FactSet data. The fund's 0.71% expense ratio is the highest among the three energy ETFs.
The solar fund's underperformance comes as monthly returns declined 1.9% while URA gained about 29%, according to FactSet data.
Meanwhile, oil market dynamics continue to influence energy sector expectations. Oil prices are unlikely to break above $80 per barrel as the Trump administration wants energy costs closer to $50 per barrel, according to consulting firm Rystad Energy, cited in the CNBC report.
