The Sprott Uranium Miners UCITS ETF has surged past $100 million in assets under management amid renewed interest in nuclear power as an alternative source of clean energy.

Uranium prices have reached a 12-year high in September.

The fund reached the $100m milestone less than 18 months after it was brought to market in May 2022 through a partnership between Toronto-based Sprott Asset Management and European white-label ETF issuer HANetf.

Sprott also oversees a US-listed sister uranium miners ETF with over $1.1 billion in AUM.

Uranium prices have soared nearly 40% year-to-date, touching a 12-year high in September and reaching levels not seen since prior to the Fukushima incident of 2011.

Analysts have ascribed the current rally in uranium prices to the ongoing energy crisis coupled with the increasingly urgent need to achieve net-zero targets – nuclear power has been touted as a vital component of the climate transition due to its efficiency, arguable safety, and ultra-low CO2 emissions per GWh.

The Sprott Uranium Miners UCITS ETF, which invests in companies worldwide that specialize in the mining, exploration, development, and production of uranium, has benefitted considerably off the back of rising uranium prices, posting a year-to-date return of 29.8% (data as of 12 September 2023).

According to HANetf, the ETF’s robust performance demonstrates the strength of the uranium mining sector as well as its diversification potential given that the broader commodities universe, as measured by the Bloomberg Commodity Index, declined -5.3% over the same period.

Hector McNeil, co-Founder and co-CEO of HANetf, commented: “The growth of the Sprott Uranium Miners UCITS ETF has been exceptional, and we are excited to see it reach $108m in AUM in just over a year after its launch. The price surge of uranium, and its outperformance relative to other commodities, is in our view demonstrative of a growing realization that nuclear is an essential and necessary part of the net-zero transition.

“The Sprott Uranium Miners UCITS ETF offers exposure to the growth of nuclear power through uranium miners, which have been historically underrepresented in the energy sector, posing upside potential.”

Methodology

The ETF tracks the North Shore Sprott Uranium Miners Index which, in addition to uranium miners, also includes exposure to firms and trusts that hold physical uranium, uranium royalties, or other uranium-related, non-mining assets. Eligible firms must have market capitalizations above $40 million.

Chosen constituents are weighted by market capitalization while setting the aggregate weight of miners, explorers, and developers at 82.5% and the aggregate weight of firms that hold physical uranium or royalties at 17.5%.

Capping rules aim to enhance diversification by limiting the weight of the largest company to 15%, the combined weight of all companies above 5% to 40%, and the weight of any firm outside of the top five to 5%.

The index is rebalanced on a semi-annual basis.

As of the end of August 2023, Canadian stocks accounted for over half (50.6%) of the total index weight with the next-largest country exposures being Australia (15.6%), Kazakhstan (13.1%), and the US (11.2%).

Cameco, the world’s largest uranium producer at roughly 20% of global production, accounted for the largest index weight at 17.0%. Other notable positions included JSC National Atomic Company Kazatomprom (13.1%), Sprott Physical Uranium Trust (12.7%), NexGen Energy (5.1%), and Denison Mines (4.9%).

The ETF comes with an expense ratio of 0.85% and is classified as an Article 6 product under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).

. It is listed on London Stock Exchange in US dollars (URNM LN) and pound sterling (URNP LN) as well as on Xetra (U308 GY) and Borsa Italiana (U308 IM) in euros.

Sprott and HANetf have also teamed up on a second clean energy-related mining ETF in Europe – the Sprott Energy Transition Materials UCITS ETF (SETM LN). This fund provides exposure to mining companies that are providing critical materials needed for the global clean energy transition such as rare earths, silver, copper, lithium, nickel, manganese, cobalt, and graphite.

SETM comes with an expense ratio of 0.75% and is classified as an Article 8 product under SFDR.