Bank of America Merrill Lynch suggests that three uranium and nuclear energy ETFs—Sprott Uranium Miners ETF (URNM), Global X Uranium ETF (URA), and VanEck Uranium + Nuclear Energy ETF (NLR)—are set to perform well in the long term. Since 2019, nuclear power-related companies have consistently outperformed their peers, with the nuclear energy ETFs monitored by the bank showing an annual growth of 27%. This contrasts with the MSCI World Index, which tracks global stocks and has recorded a 14% increase annually.
The demand for nuclear power is surging as electricity demand grows at an unprecedented pace, creating new investment opportunities. Over the past year, uranium and electricity ETFs have attracted $1.6 billion in investments, while clean energy funds saw an outflow of $2.4 billion. Nuclear energy ETFs now hold assets exceeding $6 billion, surpassing other clean energy funds that dwindled from $22 billion to $5.5 billion in three years.
Nuclear energy is becoming increasingly attractive due to its cost-effectiveness and sustainability. On average, nuclear power boasts a 93% uptime, substantially higher than wind's 35% and solar's 25%. The estimated average cost to construct and generate nuclear power is $96 per megawatt-hour, lower than wind's $146 and solar's $109. Moreover, a 1000-megawatt nuclear plant uses just 1.3 square miles compared to 45-75 square miles for solar and 260-360 for wind.
From 2019 onwards, nuclear energy ETFs have delivered returns 151% higher than the global stock industry average, also offering stronger risk-adjusted returns. Analysts draw parallels between nuclear energy’s potential and cutting-edge technology sectors like AI.
The Sprott Uranium Miners ETF (URNM) is particularly promising, fueled by rising uranium prices. The report forecasts a supply-demand imbalance for uranium, anticipating a price surge by 2026. Technological advancements such as small modular reactors (SMRs) and prolonged nuclear plant lifespans are creating incremental uranium demand, with companies like Google investing in nuclear projects. As supply constraints are expected until 2027, URNM has already seen a growth of over 230% since 2019.
Global X Uranium ETF (URA) offers diversified income sources through investments in top uranium mining and concentration companies worldwide, appreciating over 250% since 2019. Its holdings include firms like Mitsubishi Heavy Industries, providing geographic and sector diversification.
VanEck Uranium + Nuclear Energy ETF (NLR) has outperformed global utility and energy stocks by nearly 60% since 2019. The rising interest from tech companies in nuclear energy has further boosted NLR. This ETF has a significant utility sector allocation, including Constellation Energy Corp (CEG, Financial), which recently partnered with Microsoft to power its data center, enhancing NLR’s value.
