Small Uranium Fund Offers Unique Approach

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker, financial journalist, and money manager.

Nuclear energy may be a daunting idea to some, but the trend toward using it is likely to continue. Next in my series on funds targeting this industry is VanEck Uranium+Nuclear Energy ETF (NLR).

This fund’s holdings are a little different from those of its peers in the nuclear and uranium segments. It has fewer than 30 holdings, which may make its performance more volatile than that of many exchange-traded funds (ETFs). And those holdings tend more toward utilities rather than energy, which offers a different approach.

Many of the utilities held in NLR tend to be large-cap companies. The fund also offers international exposure, while still having more than half of assets allocated to U.S. stocks. Weighting is market-cap-based, meaning that a few heavy hitters are large drivers of its overall performance.

NLR is down considerably over the last few weeks, which may offer an attractive entry point for investors, particularly any who suspect its recent highs might be re-achievable.

NLR’s year to date performance, down 4.78%, is still far better than the dismal results in the S&P 500 over that same time of -23.31%. And the fund was up for the year as recently as Sept. 22. NLR has also performed much better this year than many of its more typically organized peers, such as Global X Uranium ETF (URA), which is down 13.6% in the same period.

The 0.60% expense ratio attached to this fund is run-of-the-mill and compensated for by its 2.05% yield. The ETF’s assets under management total just $51.7 million, which means it does fall under my recommended threshold for investment. However, the fund’s strategy is nonetheless interesting and worthy of discussion.

Chart courtesy of www.StockCharts.com

Top holdings for this fund include Public Service Enterprise Group Inc. (PEG), 7.93%; Dominion Energy Inc. (D), 7.87%; Constellation Energy Corp. (CEG), 7.47%; Fortum Oyj, 6.53%; and Entergy Corp. (ETR), 6.44%. The top 10 holdings account for over 60% of its assets.

In addition to the 52.6% weighting in the United States, the other nations most prominently represented include Japan, Canada and France.

For investors looking for ways to invest in the uranium industry, VanEck Uranium+Nuclear Energy ETF (NLR) offers a unique approach to consider.

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