When investors talk or think about energy stocks, they likely consider traditional commodity investments, such as oil, natural gas producers and refiners.
However, those companies don’t tend to excite investors or spur thoughts of exponential growth. One alternative energy that is currently seeing some time in the limelight is nuclear.
It is considered a relatively clean energy, and in the United States, both parties are warming to the idea as a long-term solution to the nation’s energy woes. In recent days, prices of uranium have also been driven up as a result of the war in Ukraine.
There are not many options on the exchange-traded fund (ETF) market to allow investors to target this specific theme, but one is Global X Uranium ETF (URA). The investment thesis for this fund is precisely what it sounds like. URA holds companies involved in uranium mining as well as the production of other components of the nuclear energy process. It is a strategy for those who believe nuclear energy is the way of the future.
This fund has performed impressively of late. Its one-year return sits at 30.95%, including a more than 10% gain in the last month which came on the heels of a more than 10% spike in just a few trading days in late February after Russia invaded Ukraine. The stark price changes are plain to see in the chart below.
This fund holds just under $2 billion in assets. The expense ratio of 0.69% is not cheap, but that is par for the course with highly specific ETFs. URA pays only a small dividend of 0.41%.
Among the fund’s 49 holdings, the largest by far is Cameco Corp., at 25.01% of assets. Other significant investments include Sprott Physical Uranium Trust, 7.00%; Nexgen Energy Ltd., 5.68%; and Paladin Energy Ltd., 3.85%.
For investors seeking to invest in an alternative energy source that has recently come into favor, Global X Uranium ETF (URA) may be the right investment at the right time.
As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.