Buoyed by supply risks and robust long-term demand prospects, uranium spot prices topped $100 per pound in early 2024. Despite a recent pullback, miners and analysts unanimously believe that the long-term upward trend in uranium prices will persist.
Last month, the world’s largest uranium producer, Kazakhstan’s Kazatomprom revealed during an earnings conference call that they anticipate a supply shortfall of 21 million pounds by 2030, which is projected to grow to 147 million pounds by 2040. Additionally, Cameco issued a warning indicating supply challenges in the coming years. Together, these two companies account for half of the global supply.
Justin Huhn, an analyst at Uranium Insider, stated that the reason for the bullish uranium price outlook is quite simple: demand far exceeds supply. The upward trend in uranium prices indicates a brighter future for uranium miners and stocks, and is likely to drive up the prices of related exchange-traded funds (ETFs). For investors seeking stable returns, these five uranium ETFs may be a more prudent investment choice.
Total Asset Value: US$2.66 billion
The Global X Uranium ETF tracks a basket of uranium miners and producers, with an expense ratio of 0.69% and a one-year return of 39.33%. Over 70% of the fund’s holdings are in uranium companies, with nearly half of them being Canadian. The largest holdings include Cameco (TSX: CCO, NYSE: CCJ) at a weight of 21.5%, followed by Sprott Physical Uranium Trust (TSX:U.U) and NexGen Energy (TSX: NXE, NYSE: NXE) at 9.01% and 5.67% respectively.
Total Asset Value: US$1.68 billion
The Sprott Uranium Miners ETF includes both uranium producers and explorers. The ETF has an expense ratio of 0.83% and achieved a yearly return of 50.34%. Unlike the Global X Uranium ETF, this ETF holds small-cap stocks, accounting for 37.82% of its holdings. The top holdings include Kazatomprom (LSE:59OT, OTC Pink:NATKY) at 14.56%, the Sprott Physical Uranium Trust at 14%, and Cameco at 13.51%.
Total Asset Value: US$302.4 million
The Sprott Junior Uranium Miners ETF was launched in February 2023 and tracks the NASDAQ Sprott Junior Uranium Miners Index (INDEXNASDAQ:NSURNJ), which follows the performance of stocks of small-scale uranium mining companies. The ETF comprises 34 component stocks, all of which are involved in uranium mining, development, or exploration. The largest holdings include Paladin Energy (ASX: PDN, OTCQX: PALAF) at 13.15%, NexGen Energy at 12.23%, and Uranium Energy (NYSEAMERICAN: UEC) at 11.24%. The ETF achieved a one-year return of 45.57%.
Total Asset Value: US$154.4 million
The VanEck Vectors Uranium + Nuclear Energy ETF was launched in 2007 and tracks a market-cap-weighted index of stocks from the uranium and nuclear energy industry. The ETF has an expense ratio of 0.61% and achieved a one-year return of 33.27%. In this ETF, large-cap companies account for 43.9% of the holdings, including Constellation Energy Group (NASDAQ: CEG) at a weight of 8.17%, PG&E (NYSE: PCG) at a weight of 7.76%, and Public Service Enterprise Group (NYSE: PEG) at 7.55%.
Total Asset Value: US$75.82 million
The Horizons Global Uranium Index ETF was established in 2019 and is the first pure-play uranium ETF in Canada, providing exposure to the growth of the uranium industry. The fund has an expense ratio of 0.99% and achieved a one-year return of 58.9%. Its major holdings include Cameco at 19.86%, Kazatomprom at 19.81%, and NexGen Energy at 7.23%.
