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Giving Uranium Another Try With This New ETF

ETF Professor

Uranium equities have had a rough go of it, a condition that has lasted several years. Over the past three years, the original uranium exchange traded fund is lower by almost 4% while the S&P 500 Materials Index is higher by 25.5%. Perhaps a new uranium ETF will have better fortune.

The North Shore Global Uranium Mining ETF (NYSE: URNM) debuted Wednesday as the newest uranium ETF on the block. URNM was launched by Exchange Traded Concepts in conjunction with North Shore Indices, Inc.

“North Shore Indices, Inc.'s objective is the creation of opportunistic, thematic indices whose construction is overseen by domain experts, not product marketers. They create indices on novel and/or out-of-favor, contrarian investment idea,” according to the firm's website.

Why It's Important

While nuclear power, which is powered by uranium, isn't mentioned in the same breath as solar or wind, it's a clean-burning energy source and one some major developing economies are boosting use of to damp pollution.

“As the world’s thirst for clean, emissions-free sources of alternative energy continues to grow, nuclear power is emerging as the means to meet this demand,” according to North Shore Indices. “Nuclear energy can generate large amounts of energy at reasonable prices relative to other forms of alternative energy and emits no greenhouse gases.”

Due in large part to the nuclear reactor disaster in Japan in 2011, uranium prices have plunged from the 2007 highs, but the commodity appears to be finding a bottom, potentially paving the way for URNM to be a well-timed new ETF.

What's Next

Strong demand for uranium could bolster the case for URNM.

“Focused on companies with exposure to the uranium sector, this newly created Global Uranium Mining ETF should allow investors to benefit from potentially favorable uranium fundamentals,” according to ETC and North Shore. “As the world’s thirst for clean, 24x7, emissions-free sources of alternative energy continue to grow, nuclear power is emerging as a potential means to meet this demand. According to the World Nuclear Association’s most recent Nuclear Fuel Report there are 444 operating nuclear reactors, with 54 under construction, 111 planned, and 349 proposed.”

URNM holds 26 stocks and charges 0.85% per year, or $85 on a $10,000 investment.

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