Kazakhstan, the leading producer of uranium, just announced a shift in its policies that increased the value of uranium stocks - and raised concerns about future uranium supply. On July 10, the Kazakh government announced a significant MET increase, replacing the 6% flat rate with a 9% rate in 2025 and a two-tier system in 2026 that could push rates up to 20.5%.
The market reacted quickly, as uranium stocks surged. The bullish sentiment stems from potential supply constraints due to the new tax structure. According to BMO, the new tax rates "provide less incentive for Kazatomprom to increase production, in our view, with less penalty for higher uranium prices than production, which could add to support for the uranium price." This backdrop creates a compelling case for investors to consider uranium-focused exchange-traded funds (ETFs) as a strategic addition to their portfolios.
And beyond the finer points of Kazakh tax policy, the renewed interest in nuclear energy as a clean power source, coupled with a projected 28% increase in global uranium demand from 2023 to 2030, also make these ETFs look attractive. They offer a diversified approach, investing in uranium mining, processing, and nuclear energy production companies. Here's what you need to know.
1. Global X Uranium ETF (URA)
The Global X Uranium ETF (URA) boasts a hefty $3.58 billion in assets under management (AUM), and a straightforward strategy. It aims to mirror the performance of the Solactive Global Uranium & Nuclear Components Total Return Index, focusing on companies deeply involved in the uranium industry. This includes everything from mining and exploration to producing nuclear components, offering investors broad exposure to the sector.
Performance-wise, URA is up 5.2% year-to-date. Zoom out a bit, and the picture looks even better, with a market-beating 33.2% return over the past year.
URA's top holding is Cameco Corp. (CCJ), which makes up 25.16% of the fund. Following closely is the closed-end Sprott Physical Uranium Trust Units (SRUUF), at 7.94%, and Paladin Energy (PALAF), at 5.43%. The top five are rounded out by NexGen Energy (NXE) and Uranium Energy (UEC), at 5.23% and 4.23%, respectively.
With an average daily volume of 2.5 million shares, this ETF clearly attracts plenty of interest and liquidity. This high volume can be a boon for investors, making trade entry and exit easier without the risk of significant price slippage.
On the fee front, URA has an expense ratio of 0.69%. While it's not the cheapest ETF out there, it's still reasonable considering the fund's specialized nature and the exposure it provides to a niche market.
URA has been generous to its investors, offering a juicy 5.56% yield. The fund pays out dividends twice a year, with an annualized dividend of $1.71 per share.
2. VanEck Uranium & Nuclear Energy ETF (NLR)
The VanEck Uranium & Nuclear Energy ETF (NLR) manages $241 million in assets. Its strategy is to mirror the performance of the MVIS Global Uranium & Nuclear Energy Index, focusing on companies deeply involved in the uranium and nuclear energy sectors. This includes everything from uranium mining to nuclear power facility construction and maintenance, giving investors broad exposure to the entire nuclear energy ecosystem.
NLR is up 12.6% year-to-date, and 33.8% over the past 52 weeks.
Geographically, NLR has a global reach. While a significant chunk (39.5%) is invested in the USA, it also has notable exposure to Canada (17.1%) and various markets across Europe and Asia. This global approach helps spread the risk while tapping into international opportunities in nuclear energy.
When it comes to holdings, Public Service Enterprise Group (PEG) and utility sector standout Constellation Energy (CEG) lead the pack, followed by Cameco. PG&E Corporation (PCG) and Finnish power company Fortum Oyj (FOJCF) round out the top five. This lineup exposes investors to some of the sector's most prominent players.
With average daily volume of fewer than 100K shares, this ETF is somewhat less suited than URA to active trading strategies, so mind those spreads when you enter a position.
On the fee front, NLR is competitive, with a gross expense ratio of 0.64% and a net expense ratio of 0.60%. While not the cheapest ETF, it's reasonable considering the specialized nature of the fund and the exposure it provides to a niche market. NLR has been generous with dividends, offering an annual yield of around 3.89%.
3. Sprott Uranium Miners ETF (URNM)
The Sprott Uranium Miners ETF (URNM) strategy is laser-focused on the uranium mining industry. The fund invests at least 80% of its assets in the North Shore Global Uranium Mining Index, which tracks companies deeply involved in uranium activities. This includes mining, exploration, development, production, holding physical uranium, and owning uranium royalties.
URNM is slightly negative on a YTD basis, but the ETF has gained 41.8% over the past 52 weeks.
Essentially, URNM gives investors concentrated exposure to the key players in the uranium sector. This ETF manages an impressive $1.71 billion in assets, reflecting its growing popularity among savvy investors looking to capitalize on the global shift toward cleaner energy sources.
URNM holds a diverse mix of 38 different securities. The fund rebalances semi-annually in March and September, ensuring it stays aligned with the ever-changing uranium market.
URNM's portfolio reads like a who's who of the uranium world. Cameco leads the pack, commanding 17.10% of the fund's assets. Following closely are Kazatomprom (NATKY) itself at 14%, and the Sprott Physical Uranium Trust (SRUUF) at 11.5%. Rounding out the top five are Hong Kong-based CGN Mining (CGNMF) and Denison Mines (DNN), at 6.6% and 5%, respectively.
Liquidity is another strong point for URNM. The fund's average daily trading volume is right around 400,000 shares, ensuring an active market.
Plus, with an expense ratio of just 0.85%, URNM offers a cost-effective way to gain exposure to the uranium market. URNM isn't just about capital gains; it also offers income. The fund provides a 3.4% dividend yield, with an annual dividend of $1.75 per share.
The Bottom Line on Uranium ETFs
So, there you have it. For investors who want to add exposure to uranium miners and nuclear energy names without the high pressure of picking individual stock winners, these top 3 uranium ETFs - URA, NLR, and URNM - offer one-stop investing in this booming market niche.
With Kazakhstan's tax hike likely tightening strained global supplies even further, and a renewed global focus on nuclear energy as a clean power solution, these ETFs offer a compelling way to tap into the uranium market's upside potential.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
