Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

While gold has its glitter and copper has its sensitivity to economic growth, uranium tends to have a smaller profile among commodity enthusiasts. But after years of stagnation, spot uranium has climbed more than 20 per cent in the past year to around US$30 per pound (lb.) today and there is a small but growing selection of niche exchange-traded funds through which investors can play the sector.

Primarily used as a nuclear fuel, uranium has been largely out of favour with the broader market since the 2011 Fukushima disaster in Japan. But supply shortages and the global shift to low-carbon power sources have made the sector newly appealing as a niche investment segment.

“We’ve seen a run-up in the past three-to-six months because of COVID and supply shortages (and) pretty much everyone in this space is doing well,” says Spencer Barnes, associate vice-president of mutual fund and ETF strategy at Raymond James Ltd. in Toronto.

Story continues below advertisement

Dominated by a handful of producers, the uranium market is much smaller and opaque than other energy or metals commodities and tends to move to its own drumbeat.

For instance, when several uranium mines halted operations last March due to COVID-19, the loss of production caused uranium spot prices to rise 40 per cent between late March and May to around US$34/lb. The higher price helped boost the shares of top producer Cameco Corp., despite an otherwise struggling stock market and the loss of production at its massive Cigar Lake mine in northern Saskatchewan.

“Uranium … has its own interesting economic drivers behind it and is an interesting one to look at, especially at present where we’ve had a period of relative strength,” says David Kletz, vice-president and portfolio manager at Forstrong Global Asset Management Inc. in Toronto.

While the COVID-related shutdowns have been the recent trigger for the commodity’s gains, the longer-term supply-demand trend was already improving. Before Fukushima, the spot price was around US$70/lb. and started to steadily drop as falling reactor demand led to large inventory buildups. The price fell below US$18/lb. in late 2016, its lowest level in more than a decade. The resulting decline in production, followed by a gradual recovery in demand, has now set up the metal for continued strength, says Jonathan Hinze, president of research firm UxC.

“Going forward, it appears that mined production will remain slow to increase while demand stays on a slight upward trajectory. This will result in additional inventory reductions that should help to rebalance the market further,” Mr. Hinze says.

Part of the uranium demand argument is related to the desire by governments to reduce carbon emissions in their power supply, particularly with the new Biden administration including nuclear in its clean energy plan. Demand for green stock and ETF investments has also leapt, though many question whether an energy source that produces radioactive waste can be considered a ‘green’ investment.

“I see clean energy as the secondary theme here,” Mr. Barnes says. “I think many of the sovereign wealth funds that are asking for clean energy don’t really view nuclear as fitting that bill.”

Story continues below advertisement

Arguments about green credentials notwithstanding, those who find the uranium story compelling have a few ways to play the sector by way of ETFs: (All data is total return from Morningstar as of Feb. 11 market close).

Horizons Global Uranium ETF (HURA-T)

Management expense ratio (MER): 0.86 per cent

Assets under management (AUM): $11.3-million

1-year return: 95 per cent

Created in 2019, Horizons is the only Canadian-made uranium pure-play ETF. It provides a concentrated mining focus, with 32 holdings that include top miners Cameco and Kazatomprom and several juniors.

According to Mr. Barnes, the small size of the uranium space lends itself to ETF investing because the risk is spread out among a handful of companies while still maintaining a heavy weighting of the industry leaders. In larger industry groups, there’s a chance of over-diversification if a too-large number of investments flattens out the return.

Story continues below advertisement

“In such a small marketplace, it almost makes the decision to play (uranium) through an ETF easier in my opinion,” he says.

Global X Uranium ETF (URA-A)

MER: 0.71 per cent

AUM: US$337-million

1-year return: 67 per cent

Launched in 2010, Global X has by far the largest AUM of the uranium ETF offerings. It tracks a basket of nearly 40 companies. Like HURA, it’s heavily focused on miners, which make up 73 per cent of the asset weighting, focused mostly in top uranium-producing countries Canada and Kazakhstan.

“They both look to share significant holdings and can thus be expected to deliver comparable performance, " says Yves Rebetez, senior executive consultant at Credo Consulting and former managing director of ETF Insight. “Global X ‘s meaningfully larger AUM likely translates into better liquidity characteristics as far as daily volumes and could mean better bid/ask conditions on a relative basis.”

Story continues below advertisement

North Shore Global Uranium Mining ETF (URNM-A)

MER: 0.85 per cent

AUM: US$73-million

1-year return: 118 per cent

URNM, launched in 2019, tracks both producers and smaller explorers. Like URA and HURA, this ETF boasts impressive recent returns, more than doubling over the past year. While some investors might believe the bulk of the gains have already happened, Mr. Barnes notes many uranium companies have been depressed in recent years.

Still, he says the sector remains volatile, which means investors should be cautious about how much of their portfolio they want in uranium holdings.

“I wouldn’t want to necessarily be held to a particular number, but I think it would be fair to say that 25 per cent is not that number for most people,” he says. “If you’re going to wake up in a cold sweat because you have more than 5 per cent of your portfolio in it, that’s too much.”

Story continues below advertisement

VanEck Vectors Uranium+Nuclear Energy ETF (NLR-A)

MER: 0.61 per cent

AUM: US$18.7-million

1-year return: 2 per cent

NLF was launched in 2007, when uranium prices were at an all-time high above US$130/lb., and tracks both uranium companies and other uranium-related stocks, including power producers, construction and service companies.

Unlike the other entrants, whose largest single holdings are mining companies, NLR’s top holdings are Duke Energy Corp. and Dominion Energy Inc., which have both lost value in the past year, weighing on the ETF’s performance versus its peers.

More volatility ahead

While the COVID-19 production issues are temporary they are not over, as Cameco’s Cigar Lake suspended production a second time in December due to the pandemic.

Story continues below advertisement

For Mr. Kletz, the sector isn’t necessarily a buy, given its appreciation to date and that a long-term commitment to nuclear energy will require huge costs to replace aging reactors. But he acknowledges that the production issues, along with government spending earmarked for green investments and the need for future sources of carbon-friendly electricity, may also be catalysts for further growth.

“Those three things I think together have definitely bolstered the demand and caught the attention of investors as a whole over the past year or so,” he says.

Editor’s note: An earlier version of this article incorrectly stated that the HURA ETF had 10 holdings.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies