Uranium mining ETFs emerge as low-key leaders

As Russia conflict drags on and governments step up their renewable energy ambitions, the segment has outperformed

Uranium mining ETFs emerge as low-key leaders

Since Russia's invasion of Ukraine began, uranium mining ETFs have emerged as one of the best-performing segments, even as enormous swings in oil prices have piqued the interest of consumers and investors alike.

Citing data from ETFLogic, ETF.com recently reported that the North Shore Global Uranium Mining ETF (URNM) has outperformed all other U.S.-listed nonlevered ETFs with a 31.57% return in the last 30 days, while the Global X Uranium ETF (URA) has come in third with a 26.69% return.

Part of the blame can be attributed to Russia's aggression and isolation from Western economy.

In 2020, Russia exported around 6% of the world's uranium, while Ukraine supplied approximately 1.5 percent of the global supply. The VanEck Uranium+Nuclear Energy ETF (NLR) has gained only 7.34% this year, owing to its significant allocation in energy utilities with nuclear reactors rather than pure-play uranium mining businesses.

British Prime Minister Boris Johnson unveiled plans to raise nuclear power use in the UK from 16 percent to a quarter of its present power mix, including the replacement of six reactors set to retire due to age.

Last week, the White House hosted a symposium to investigate the commercial viability of nuclear fusion as a fossil fuel alternative.

URA has gained just under $450 million in assets this month, bringing its total assets under administration to $1.8 billion as of Monday, while URNM has added $171 million, bringing its total assets under management to $989 million. Those reflect a 33% and a 21% gain, respectively.

However, the profits pale in comparison to the triple-digit returns earned by the funds after nuclear temporarily became a meme stock last October.

This past January, Nick Piquard, a portfolio manager and Vice President at Horizons ETFs told Wealth Professional that uranium is a good option for advisors who wish to give their clients exposure to future energy commodities.

“If you’re going to allocate money to the energy sector, it makes sense to put some uranium in that,” he said. “So, if you want to have an energy allocation in your portfolio and want to have some exposure to what energy is going to look like in the future, that’s going to be battery metals, solar and wind, and uranium. They’re going to power the future.”

Sprott Asset Management, based in Toronto, is in the process of acquiring URNM as a supplement to the firm's existing physically backed uranium trust. Later this year, that firm plans to petition to list a new class of that trust's shares on U.S. exchanges.