Sprott commercializes its uranium mining ETF in Europe | ETF Strategy
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Based in Toronto Sprott Asset Management is preparing to launch an ETF in Europe offering exposure to companies in the uranium mining industry.
the Sprott Uranium Miners UCITS ETF will list on London Stock Exchange in US dollars (URNM LN) and the British pound (URNP LN) later in May.
It will come with an expense ratio of 0.85%.
The fund is marketed in partnership with a white label ETF issuer HANetf who will be responsible for marketing and distribution responsibilities.
The ETF will replicate the strategy behind Sprott’s US-listed stock Sprott Uranium Miners ETF (URNM US) which the company recently acquired from indexing store North Shore Indices.
After starting 2021 with just $40 million in assets, assets under management for the U.S.-listed Sprott Uranium Miners ETF recently jumped to around $1 billion due to a combination of robust inflows and stellar returns – the fund grew by 98.0% between January 1, 2021 and January 22. April 2022.
The ETF’s strong performance was boosted by an explosion in uranium spot prices as publicity surrounding the global climate crisis increased demand for clean, emission-free energy sources such as nuclear power – uranium is the fuel most widely used by nuclear power plants because it has the particularity of being able to self-sustain nuclear fission.
The fund’s recovery has also accelerated amid the ongoing war in Ukraine – the ETF has gained 51.7% since Russia’s invasion on February 24 – as the conflict underscored the importance of reducing Europe’s dependence on Russian oil and natural gas.
John Ciampaglia, CEO of Sprott Asset Management, said: “The need for low-emission energy is critical: countries are pledging to reduce their carbon footprint as global demand for electricity increases and many face the energy insecurity of traditional fossil fuels. We believe that nuclear power can be a key solution to these energy and climate change initiatives.
Hector McNeil, co-CEO and co-founder of HANetf, added: “The twin crises of climate change and Russia’s invasion of Ukraine show the desperate need for the UK and other European countries to diversify their energy supply. We have seen governments make bold pledges to limit global temperature rise to 1.5°C, but this will require a revolution in the way we produce our energy. While wind and solar have made huge strides and will be at the heart of future electricity generation, it is becoming clear that nuclear generation must also be part of the solution panoply.
ETFs follow the North Shore Sprott Uranium Miners Index which targets companies worldwide engaged in the mining, exploration, development and production of uranium, as well as companies and trusts that hold physical uranium, uranium royalties or other non-mining assets related to uranium. Eligible companies must have a market capitalization greater than $40 million.
The components chosen are weighted by market capitalization while fixing the total weight of miners, explorers and developers at 82.5% and the total weight of companies that hold physical uranium or royalties at 17.5%.
The cap rules aim to strengthen 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 company outside the top five to 5%.
The index is rebalanced on a semi-annual basis.
At the end of March, Canadian equities made up well over half (58.8%) of the total index weighting, with the other countries most exposed being Kazakhstan (14.4%), Australia (11.7%) and the United States (6.9%). .
Cameco, the world’s largest uranium producer with 18% of global production, had the largest weighting in the index at 18.2%. Other notable positions include JSC National Atomic Company Kazatomprom (14.4%), Sprott Physical Uranium Trust (10.3%), Energy Fuels (5.4%) and NexGen Energy (5.0%).
The fund is expected to be the second ETF in Europe targeting the uranium industry. Earlier this week, based in New York Overall X launched the Global X Uranium UCITS ETF (URNU LN) which is related to Solactive Global Uranium & Nuclear Components Index v2 and comes with an expense ratio of 0.65%.