Uranium Is the Power Behind These 5 Nuclear Energy ETFs
Nuclear energy ETFs offer a compelling way to gain exposure to a sector poised for growth amid the global clean energy transition.
Nuclear energy ETFs, such as the VanEck Uranium and Nuclear ETF (NLR) and the Range Nuclear Renaissance Index ETF (NUKZ), have garnered significant attention and performed well lately, driven by a global pivot toward clean energy and energy security.
Year-to-date, all seven U.S.-traded nuclear energy exchange-traded funds are outperforming the broader stock market, with gains ranging from 11% to 25%, compared to 4% for the SPDR S&P 500 ETF Trust (SPY).
As countries strive to achieve net-zero carbon emissions, nuclear power is increasingly seen as a critical solution for providing reliable, low-carbon energy.
President Trump's choice of Chris Wright as energy secretary shows promise for the continued growth of nuclear power. Although he is a longtime natural gas executive, Wright sits on the board of directors of startup Oklo, which is developing an advanced reactor design, reports financial data and analytics firm S&P Global.
Additionally, the energy crisis in Europe and rising geopolitical tensions have underscored the need for stable energy sources, boosting the appeal of uranium and nuclear-focused investments.
With governments investing in nuclear infrastructure and advancements in technology like small modular reactors (SMRs), nuclear energy ETFs are positioned as a compelling option for investors seeking exposure to this growing sector.
The Power of Uranium: How Nuclear Energy ETFs Work
Nuclear energy ETFs are exchange-traded funds that invest in companies involved in the nuclear power industry. These funds typically hold a diversified portfolio of businesses operating across the nuclear energy supply chain, such as:
- Uranium Miners: Companies that extract and process uranium, the primary fuel for nuclear reactors.
- Utility Providers: Firms that operate nuclear power plants and supply electricity.
- Nuclear Technology Developers: Companies innovating in nuclear reactor designs, including SMRs and next-generation reactors.
- Support Services: Businesses providing equipment, maintenance, and services for the nuclear industry.
Some nuclear energy ETFs also include exposure to physical uranium or uranium futures contracts, giving investors direct access to the commodity’s price movements. These ETFs often track specific indexes that focus on nuclear energy and uranium, providing a cost-effective and diversified way to invest in the sector.
Uranium, Nuclear Energy ETFs List
Ticker | Fund | AUM | Expenses | 1-Yr Return |
URA | Global X Uranium ETF | $3.8B | 0.69% | 5.05% |
URNM | Sprott Uranium Miners ETF | $1.6B | 0.75% | -15.38% |
NLR | VanEck Uranium and Nuclear ETF | $1.1B | 0.61% | 28.07% |
URNJ | Sprott Junior Uranium Miners ETF | $287.2M | 0.80% | -16.78% |
NUKZ | Range Nuclear Renaissance Index ETF | $172.4M | 0.85% | 103.80% |
Data as of Jan. 23, 2025. Leveraged ETFs are not listed. Past performance is no guarantee of future results.
Pros and Cons of Investing in Nuclear Energy ETFs
While investing in nuclear energy ETFs has several potential benefits, such as a growing demand for uranium and clean energy, the energy subsector faces regulatory risks and negative public perception.
Pros
- Clean Energy Transition: Nuclear energy is a low-carbon, reliable energy source, making it a key part of global efforts to combat climate change.
- Growing Demand for Uranium: Increasing nuclear reactor builds and restarts, particularly in Asia and Europe, are driving demand for uranium.
- Diversification: ETFs provide exposure to a broad range of companies across the nuclear supply chain, reducing the risk associated with individual stock investments.
- Potential for Long-Term Growth: Advancements in nuclear technology, such as SMRs, and policy support for nuclear energy suggest strong growth potential for the sector.
Cons
- Regulatory Risks: Nuclear energy projects often face lengthy approval processes and strict regulations, which can delay growth.
- Public Perception: Negative sentiment stemming from past nuclear disasters can limit the sector’s adoption in certain regions.
- Commodity Price Volatility: Uranium prices can be highly volatile, impacting the performance of ETFs with significant exposure to uranium miners or futures.
- Competition from Renewables: While nuclear is low-carbon, the rapid growth of wind and solar power could overshadow its role in the clean energy transition.
Outlook for Uranium and Nuclear Energy
The outlook for uranium and nuclear energy remains promising as the world seeks reliable and sustainable energy solutions. Governments in key regions, including China, India, and the European Union, are committing to nuclear energy as part of their energy mix.
In the U.S., recent legislation like the Inflation Reduction Act included provisions for nuclear energy development, further bolstering the sector, while Trump’s new energy secretary sits on the board of a nuclear power company.
On the uranium front, supply constraints and growing demand are expected to support higher prices. Many utilities are signing long-term uranium supply contracts, signaling confidence in the sector’s future. Additionally, technological advancements in reactor design and increased adoption of SMRs could accelerate the nuclear renaissance, creating new opportunities for investors.
Bottom Line on Uranium, Nuclear Energy ETFs
Nuclear energy ETFs offer a compelling way to gain exposure to a sector poised for growth amid the global clean energy transition. While risks like regulatory challenges and commodity price volatility exist, the long-term potential of nuclear energy as a low-carbon, reliable power source makes these ETFs an attractive option for investors seeking to diversify their portfolios.
With a promising outlook for uranium and continued policy support, nuclear energy ETFs are well-positioned to remain a relevant and rewarding investment choice in the years to come.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investing in nuclear energy ETFs involves risks, and investors should carefully consider their investment objectives and risk tolerance before making any investment decisions.
At the time of publication, Kent Thune held a long position in URNM.