With the global uranium race heating up, investors may want to run their slide rule over ASX exchange-traded fund (ETF) Betashares Global Uranium ETF (ASX: URNM).
URNM is intended to track the performance of a basket of Australian and international uranium miners.
You can buy and sell shares in this top ASX ETF just like you would with individual stocks.
And it gives you instant diversification and exposure to 38 leading uranium producers across the globe.
Launched in June 2022, URNM's top four holdings are internationally listed companies:
- Cameco Corp
- NAC Kazatomprom JSC
- Sprott Physical Uranium Trust
- CGN Mining Co LTD
Two leading ASX uranium stocks are also in the ETF's top 10 holdings. Namely Paladin Energy Ltd (ASX: PDN) and Boss Energy Ltd (ASX: BOE).
Australia is second only to Canada in terms of URNM's country allocation, with Kazakhstan at number three and the United States at number four.
The ASX ETF has been running hot amid the global uranium renaissance. According to Betashares, as at 31 May and including dividends, the fund had returned 89.4% over the prior 12 months (although returns will have partially retreated from this figure as at the time of writing).
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ASX ETF making hay amid global nuclear revival
As you're likely aware, nations around the world are fast reversing their opposition to nuclear energy as a means to provide reliable baseload power without carbon emissions.
And that change in sentiment has been a boon for this ASX ETF.
Today, at least 58 new nuclear power stations are under construction across 16 countries. Twenty-two of these are in China, with India also investing heavily in new nuclear plants.
But the world's two most populous nations aren't alone.
In December, 22 nations – including the United States, Japan and France – pledged to triple their nuclear power capacity by 2050.
And in good news for uranium producers and this ASX ETF, the US Government recently unveiled a major spending package to up its nuclear capacity.
According to US Energy Secretary Jennifer Granholm:
We are entering a new era of nuclear energy, our single largest source of carbon-free electricity. We plan to invest up to US$900 million to accelerate nuclear deployment, add more small modular reactors, and reach more Americans with clean energy.
With uranium supply growth trailing demand growth, uranium prices hit all-time highs of around US$107 per pound in late January, up from an average of US$67 per pound in 2023.
Prices have come down from there, recently trading for US$86 per pound. That's also seen the URNM share price drop by around 12% over the past month.
But with uranium demand widely expected to outstrip new supplies for years yet, I believe that's just a bump in the road for longer-term investors in the top ASX ETF and could present an excellent entry point.
What are the experts saying?
Commenting on the global nuclear renaissance Guy Keller, fund manager at Tribeca Investment Partners said (quoted by The Australian Financial Review):
I think the real change has been global … which has made it much more politically safe… There has been a massive, wholesale global adoption of nuclear technology and its ability to solve decarbonisation of the electricity grid, and also some very serious energy security concerns.
Regal Partner's Phil King is among those forecasting tight uranium supplies are likely to persist for some time.
According to King:
We're seeing a huge rollout of nuclear plants all around the world, and this is very much led by India and China. Because of the time it takes to get new mines into production, this … almost guarantees that we're facing a very, very tight scenario for uranium.
With this "very tight scenario for uranium" in mind, I think this ASX ETF looks well placed for more outperformance in the year ahead.
