NLR ETF: Question & Answer

Accelerating global power demands and an intensifying drive for clean energy solutions are fueling a resurgence in nuclear energy, and uranium and nuclear energy stocks are gaining traction with investors. This blog aims to address common inquiries regarding the VanEck Uranium and Nuclear ETF (NLR), which offers an efficient means for investors to access nuclear stocks. Through this nuclear energy ETF, investors can gain exposure to the uranium and nuclear energy market, tapping into the rising demand for nuclear power within a diversified strategy.

• How is increasing electricity demand and the emergence of artificial intelligence (AI) revitalizing the nuclear energy industry?
• What is the VanEck Uranium and Nuclear Energy ETF (NLR)?
• How is the portfolio composition determined for NLR?
• How has the global shift towards clean energy impacted the nuclear energy industry?
• How much exposure does NLR have to uranium miners?
• What are the risks associated with investing in uranium and nuclear energy?
• Where does NLR fit into a portfolio?
• Does NLR generate Schedule K-1 tax statements?

How is increasing electricity demand and the emergence of artificial intelligence (AI) revitalizing the nuclear energy industry?

The nuclear energy industry is experiencing a significant resurgence driven by growing global demand for electricity and the rapid emergence of artificial intelligence (AI). As the world increasingly shifts towards technologies like electric vehicles and AI, the need for stable, high-capacity clean energy sources has become more acute. Nuclear power, known for its ability to generate large amounts of reliable and low carbon electricity, is uniquely suited to meet these demands. Furthermore, technological advancements within the nuclear sector, such as the development of small modular reactors (SMRs), are making nuclear energy a more flexible and economically viable option. Coupled with supportive governmental policies aimed at decarbonization, these factors are positioning nuclear energy as a key player in the global transition to a more sustainable energy future. This synergy of AI-driven energy needs, global decarbonization initiatives and nuclear power's capabilities, is not only revitalizing the industry but also making it a critical component in meeting future energy requirements sustainably. For more insights on these dynamics, read our Three Forces Powering the Nuclear Energy Surge and AI's Impact on the Surge of Nuclear Investments: Everything You Need to Know blogs.

What is the VanEck Uranium and Nuclear Energy ETF (NLR)?

The VanEck Uranium and Nuclear Energy ETF (NLR) is an exchange-traded fund that provides investors with comprehensive exposure to companies operating within the nuclear energy and uranium industries. By investing in NLR, individuals can tap into the broad nuclear energy industry which encompasses activities such as uranium mining, nuclear power generation, and the provision of equipment and services related to nuclear energy. Additionally, NLR offers global exposure as it includes companies from various regions, thereby allowing investors to benefit from the nuclear energy sector's growth and advancements worldwide.

How is the portfolio composition determined for NLR?

The portfolio composition of NLR is determined based on a passive management strategy, seeking to replicate the performance of the MVIS Global Uranium & Nuclear Energy Index. This is a market cap weighted index that is designed to track the overall performance of companies involved in the nuclear energy and uranium industries. This includes companies engaged in uranium mining, the construction, engineering, and maintenance of nuclear power facilities and nuclear reactors, the production of electricity from nuclear sources, and providing equipment, technology, and/or services to the nuclear power industry. To be eligible for inclusion, a company must generate, or be expected to generate, at least 50% of its revenues from these business activities resulting in comprehensive and pure-play exposure to the industry.

How has the global shift towards clean energy impacted the nuclear energy industry?

The global shift towards clean energy has cast a spotlight on the nuclear energy and uranium industries as potential, or even necessary, contributors to a low-carbon energy future. Nuclear power is seen as a viable alternative to fossil fuels as it generates a substantial amount of electricity with minimal greenhouse gas emissions. This perspective has fostered a renewed interest in nuclear energy leading to new nuclear power projects, research into advanced nuclear technologies, and the exploration and development of new uranium mining sites to meet anticipated demand.

Additionally, there have been positive shifts on the policy front. More and more, governments are revisiting their nuclear energy policies to align with their carbon reduction goals. There is a growing recognition of the role nuclear power can play in achieving a low-carbon energy mix, especially as part of a balanced energy portfolio that includes renewables, like wind and solar, which can be intermittent in their ability to deliver energy. International collaborations and agreements are also emerging to promote nuclear energy development and to establish a global framework for nuclear safety and security.

In short, the global shift towards clean energy is fostering a conducive environment for the growth and development of the nuclear energy complex that is expected to be supportive of the companies operating within the industry.

How much exposure does NLR have to uranium miners?

The VanEck Uranium and Nuclear Energy ETF (NLR) provides exposure to a variety of companies within the nuclear energy industry, which includes uranium mining companies, among others. NLR tracks a passive market-cap weighted index that reflects the broader industry, providing a balanced exposure to various facets of the nuclear energy value chain. Generally, companies operating within the uranium mining segment have accounted for roughly half of NLR’s exposure. However, the degree of this exposure to uranium miners can vary based on factors including market conditions and the performance of companies within the sector.

For current information on the exposure to uranium miners and other segments of the nuclear energy sector, please visit NLR's product page where up-to-date holdings are available.

What are the risks associated with investing in uranium and nuclear energy?

Investing in nuclear energy brings forth a mix of opportunities and challenges. While advancements in nuclear technologies and energy policy reformation present promising investment prospects, there are also inherent risks. Companies operating in the industry may face developmental hurdles such as unforeseen costs or delays in nuclear reactor projects due to technical complexities, stringent regulatory compliance, or public opposition. The sector is also highly susceptible to policy shifts, which can be triggered by major incidents or the emergence of alternative energy technologies, thereby altering the regulatory and investment landscape. Additionally, volatility in uranium prices, driven by supply-demand dynamics and geopolitical factors, can directly impact the revenues of mining companies and the nuclear fuel costs that power generators must ultimately pay.

Where does NLR fit into a portfolio?

NLR can be integrated into an investment portfolio as a long-term strategic allocation providing both diversification benefits and access to the potential growth opportunity amidst the global push towards clean energy. Additionally, because of its targeted exposure, NLR can be used more tactically by investors to express a shorter-term view of the nuclear energy industry in an efficient and low-cost way.

Does NLR generate Schedule K-1 tax statements?

No. Unlike an investment in many commodity strategies, the equities of uranium miners and other nuclear energy companies do not generate burdensome K-1 tax statements.