Anticipated Nuclear Power-Focused Exchange-Traded Funds in 2024
With the surge in interest in advanced technologies (AT), investors have started to take notice of nuclear energy stocks and related exchange-traded funds (ETFs). For those not closely following the AT sector, the connection between AT and nuclear energy may seem peculiar. However, the reasoning is straightforward. The significant energy demands of AT computing places a strain on the electrical grid, a problem that is thought to be alleviated by a data center's adoption of nuclear energy.
Experts anticipate that the escalating energy demands of AT will persist. According to a consulting firm, McKinsey and Company, the demand for AT-ready data center capacity could increase at an average annual rate of 33% between 2023 and 2030.
The use of machines to simulate human intelligence is known as artificial intelligence (AI). To give some perspective to the growing size of data centers, Oracle's chairman and CTO, Larry Ellison, mentioned during the company's first quarter 2025 conference call that they are developing an 800-megawatt (MW) data center, which will be powered by three small modular nuclear reactors (SMRs) and will contain acres of Nvidia GP clusters to train the world's largest AI models.
Government support for nuclear energy is another factor encouraging investors to examine this niche of the energy market. The Biden Administration revealed a framework aimed at deploying 200 gigawatts of new nuclear energy capacity by 2050.
Understanding nuclear energy
While some investors may already be aware of the current interest in nuclear energy, many may still be unclear about its specifics. And because the savviest investors are well-informed investors, it's worth briefly reviewing how nuclear energy is used to generate electricity.
Essentially, nuclear energy comes from two types of reactions: nuclear fission and nuclear fusion. These days, nuclear power plants generate electricity from nuclear fission, the process of splitting the nucleus of an atom into smaller parts, resulting in the production of free neutrons and lighter nuclei, along with a substantial amount of energy. This process produces substantial heat, which is then used to generate steam for driving turbines connected to electricity generators.
Unlike with burning fossil fuels, no carbon dioxide is produced when electricity is generated through nuclear fission.
Top nuclear energy ETFs
Three top nuclear energy ETFs to invest in 2024
While purchasing individual nuclear energy stocks is a viable option, those looking to mitigate risk may find nuclear energy ETFs more appealing, as the downturn of an individual stock within a fund will have a less drastic impact on one's portfolio compared to investing in a single stock.
Global X Uranium ETF
1. Global X Uranium ETF
With a diversified portfolio of 51 holdings and $3.6 billion in assets under management, the Global X Uranium ETF (URA -4.5%) offers investors broad exposure to the nuclear energy sector. Beyond companies that produce uranium, the ETF includes businesses that manufacture nuclear components and provide services for nuclear power plants.
Cameco, a leading producer of uranium, holds the largest position in the Global X Uranium ETF with a 24.4% weighting. Small modular reactor stocks NuScale Power and Oklo also make up top positions with weightings of 3.6% and 3.1%, respectively.
Due to the prominent position of Cameco as well as the significant weightings of other uranium producers like Uranium Energy and Denison Mines, energy stocks account for the largest sector in the portfolio at 65%, with industrials and materials coming in second and third.
The Global X Uranium ETF has a 0.69% total expense ratio.
Sprott Uranium Miners ETF
2. Sprott Uranium Miners ETF
Positioning itself as "the only ETF to provide pure-play exposure to uranium miners and physical uranium essential to nuclear power," the Sprott Uranium Miners ETF (URNM -4.17%) aims to invest at least 80% of its total assets in securities found in the North Shore Global Uranium Mining Index, which aims to track the performance of companies dedicating at least 50% of their assets to the uranium mining industry.
Cameco once again stands as the largest position with a 16.8% weighting in the ETF, which has 38 holdings overall and net assets of $1.7 billion. In addition to established uranium producers like Cameco and Denison Mines, the Sprott Uranium Miners ETF includes exploration-stage companies such as Ur-Energy.
The Sprott Uranium Miners ETF has a 0.75% total expense ratio.
VanEck Uranium and Nuclear ETF
3. VanEck Uranium and Nuclear ETF
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Unlike other nuclear energy ETFs that we've talked about, the VanEck Uranium and Nuclear ETF (NLR, down -3.81%) is an appealing choice for investors seeking passive income. With a 12-month yield of 3.7% and annual distributions, this ETF is a go-to for those who want to add some extra cash flow to their portfolios.
This ETF, with 27 holdings, is filled with familiar names in the nuclear energy sector, like Cameco and Denison Mines. However, it sets itself apart by placing significant emphasis on utility stocks that manage nuclear power facilities within its portfolio. Energy sector stocks and utility stocks make up 44.6% and 41.5% of the portfolio, respectively.
The largest position in the fund is Constellation Energy (CEG, down -5.43%), with a 7.9% weighting, and Public Service Enterprise Group (PEG, down -2.33%) is the third-largest position, with a 7% weighting.
This ETF has a lower net expense ratio of 0.61%.
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FAQ
Should you invest in nuclear energy?
Investors who believe in nuclear energy as a viable energy solution for powering data centers should be aware of the risks involved. Political opposition, the growth of nuclear power assets, regulatory hurdles, and significant startup costs for nuclear power projects are just a few challenges that investors should consider.
Is nuclear energy worth investing in?
Nuclear energy is garnering interest as a choice to meet the energy demands of AI computing, and it does have its advantages for investors. However, it's essential for individual investors to weigh the pros and cons to determine if nuclear energy investments are a good fit.
Is there a nuclear energy index fund?
Yes, there are several nuclear energy index funds. The VanEck Uranium and Nuclear ETF, for instance, aims to deliver the same results as the MVIS Global Uranium & Nuclear Energy Index and tracks the Solactive Global Uranium & Nuclear Components Total Return Index.
What is nuclear energy?
Nuclear energy can be generated through two processes: nuclear fission and nuclear fusion. Nuclear fission is the process of splitting the nucleus of an atom into its parts, producing a large amount of energy. In contrast, nuclear fusion occurs when two lighter atomic nuclei combine, resulting in the creation of a heavier nucleus, also generating significant energy.
Scott Levine does not own any shares of the stocks mentioned. Our website has positions in and recommends Nvidia, Oracle, Cameco, Constellation Energy, and NuScale Power. Our website has a disclosure policy.
In light of the growing energy demands of advanced technologies, some investors might consider diversifying their portfolios to include nuclear energy stocks and related ETFs. The use of nuclear energy in powering data centers, such as those used for artificial intelligence simulations, could alleviate the strain on the electrical grid.
The Biden Administration's framework to deploy 200 gigawatts of new nuclear energy capacity by 2050 may further attract investors to this niche of the finance market. For those interested in investing in nuclear energy, ETFs can be a viable option to mitigate risk, as they provide broad exposure to the sector and offer diversification benefits.
For instance, the Global X Uranium ETF, with its diversified portfolio of 51 holdings, provides extensive exposure to the nuclear energy sector. This ETF includes not only uranium producers but also companies that manufacture nuclear components and provide services for nuclear power plants.
