A Nuclear Energy ETF with a wider exposure
to larger companies operating in
the nuclear energy sector
The Market Vectors Nuclear Energy ETF, trading under "NLR", seeks to replicate the price and yield performance of the DAXglobal Nuclear Energy Index by investing in a portfolio of securities that generally replicates the Index. This nuclear ETF has been around since August 2007.
The Index, calculated by Deutsche Borse AG, is a modified market capitalization-weighted index consisting of publicly traded companies worldwide that are engaged in the nuclear energy industry.
Companies eligible for inclusion in the Index should
- be engaged in various aspects of the nuclear energy business
- have a market cap exceeding $150 million
- have worldwide daily average trading volume of at least $1 million over the past six months and in each of the past two months
- have maintained monthly trading volume of 250,000 shares over the past six months
The Index offers global exposure to the entire nuclear value chain, including uranium mining, enrichment, uranium storage, equipment, plant infrastructure, fuel transport and energy generation. Investment advisor is Van Eck Associates Corporation.
The Index's segment weightings are reflective of the market capitalizations of each subgroup's representation in the global market place, which means that investors interested in broad market nuclear activity are getting the exposure they seek.
Currently, the Index numbers some 22 companies with uranium miners representing approximately 40 per cent of the Index, followed by nuclear generation (approx 23 per cent) and nuclear power plant infrastructure (approx 19 per cent).
What use have exchange traded funds – ETFs?
Instead of investing in individual companies an attractive alternative is to buy an index-tracking fund. This approach seeks to mirror the returns on an index at a low cost. An exchange traded fund (ETF) typically incurs lower annual management charges than an active fund, with no upfront fee.
Conventional funds, such as unit trusts and investment trusts, typically apply total charges of between 1.4 and 2.5 per cent annually, but the average ETF charges between 0.5 and 0.7 per cent. So, just by owning an average ETF, you can give yourself a 1 per cent annual head start over a standard actively-managed fund.
The Market Vectors Nuclear Energy ETF management fee amounts to 0.66 per cent p.a.
Why invest in an ETF tracker such as NLR
Investing in a uranium mining and nuclear energy ETF such as the Market Vectors Nuclear Energy ETF is an easy way to get exposure to the sector.
Most of the holdings of NLR are on foreign exchanges. Whilst listed on the New York Stock Exchange, with this ETF you obtain exposure to the international nuclear market without the hassle of foreign trading.
There are several other uranium mining and nuclear energy related trackers and ETFs that I am aware of each with varying amounts of uranium mining and nuclear energy exposure, including:
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