As the world transitions to clean energy, nuclear power is emerging as a crucial player in meeting global electricity demand. VanEck’s NLR exchange-traded fund (ETF) provides comprehensive exposure to the nuclear sector, balancing the volatility of uranium mining with the stability of nuclear utilities. The diversified fund is uniquely positioned to capitalize on growth trends driven by the increasing demand for clean energy and the rise of AI-powered industries. Financial advisors can use NLR as a strategic tool to position clients for the future of energy and technology.
In an era of rapid technological progress and growing global demand for clean energy, nuclear power is making a significant comeback. As the world pivots toward more sustainable energy sources, uranium and nuclear power are becoming essential parts of this transition. VanEck, known for its innovative investment strategies, has recognized this potential with its Uranium and Nuclear ETF (ticker: NLR). The fund offers investors broad exposure to the nuclear sector, positioning it as a smart choice for financial advisors looking to help clients capitalize on the burgeoning global energy transition.
Coulter Regal, Product Manager at VanEck, spoke to The Wealth Advisor’s Scott Martin about the resurgence of nuclear power, the current investment landscape, and how NLR serves as a strategic vehicle for tapping into the future of energy.
Nuclear: A Powerhouse in Clean Energy
Nuclear power is reemerging as a critical player in the quest for clean, consistent energy. The demand for electricity is rising globally, driven by sectors such as artificial intelligence and large-scale data centers, which require immense amounts of reliable power.
Despite facing challenges in the past, including regulatory hurdles and public perception issues, nuclear power is now seen as one of the most reliable and low-emission sources of electricity. It currently provides about 10% of global electricity, and in advanced economies, this figure rises to nearly 20%, according to the International Energy Agency (IEA). As the world races toward net-zero emissions, nuclear’s ability to supply stable, carbon-free power makes it a crucial component of the clean energy mix, and it’s uniquely positioned to meet the growing energy demands of AI and tech-driven industries, Regal notes, stating that for companies “wanting clean and consistent power, nuclear is the answer.”
The Case for Reliability and Efficiency
One of the standout advantages of nuclear power is its reliability. Regal emphasizes that, unlike other renewable energy sources such as wind and solar, nuclear plants have an exceptionally high capacity factor. Regal highlights the benefits: “In reality, a unit of energy production is one of the safest forms of energy we have. More importantly, it’s one of the cleanest and one of the highest uptime energy producers as well.”
Regal emphasizes the reliability of nuclear power by comparing it to other renewable energy sources. “If you look at the capacity factor of nuclear power, which is sort of a measure of the uptime, that’s about 92%. By contrast, other renewable energies like wind and solar—their capacity factors are closer to 35%.” For advisors looking to provide their clients with exposure to stable, clean energy investments, this makes nuclear an attractive option.
Moreover, the IEA recognizes nuclear power as a key player in reducing global emissions and enhancing energy security. In countries where it is widely accepted, nuclear complements renewable energy by providing dispatchable, low-emission power. This makes it an important tool in the effort to decarbonize the power sector.
NLR: Broad Exposure to Nuclear Energy
VanEck’s NLR ETF distinguishes itself by offering diversified exposure across the nuclear energy sector, rather than focusing solely on uranium mining. “NLR provides comprehensive exposure to the nuclear industry. That includes the uranium miners, but it also includes nuclear utilities, those that are producing natural electricity that is in such high demand, as well as other related services,” Regal explains.
The diversified approach helps reduce the volatility often associated with uranium miners. Uranium mining, while critical to the nuclear energy supply chain, can be a highly cyclical and volatile sector. NLR balances this potential risk by including utilities that provide a more stable and consistent return profile. As Regal points out, “The utilities actually provide a nice ballast to that volatility and can ultimately help bring down the volatility and improve your risk-adjusted repairs of this industry.”
Additionally, NLR is a global fund, providing exposure to nuclear energy developments around the world. Countries such as Japan, China, Poland, and the United Arab Emirates are all making significant investments in nuclear power, with France being a major player as well. “Nuclear power is needed all over the world,” says Regal. “This is a global phenomenon that is taking place all over the world.”
A Growth Opportunity with an AI Connection
Historically, utilities have been seen as a steady but slow-growth investment. However, that perception is shifting as utilities are becoming more closely tied to technological advancements. “In the last two years, they’ve almost become sort of an AI tangential play,” Regal explains.
NLR’s exposure to nuclear utilities positions it as a way to tap into the growth potential driven by AI and large-scale data centers. As Regal notes, “We get a lot of clients asking, ‘How else can we tap into this AI demand trend?’ And chips are obviously one, but those chips have to be powered somehow.” With tech giants like Amazon and Microsoft turning to nuclear power to fuel their data centers, NLR provides a unique opportunity to benefit from the emerging trend.
NLR as a Strategic Investment
For financial advisors, NLR is not just a play on uranium or nuclear energy; it’s a diversified, forward-looking investment that offers exposure to multiple growth drivers. As Regal explains, “We think of it as a great satellite position, kind of more growth now with the backing and the demand for electricity from clean power sources like nuclear.”
Moreover, the ETF’s global diversification and balanced exposure to both uranium miners and nuclear utilities provide stability in what can be a volatile sector. The inclusion of utilities helps mitigate the risks associated with uranium mining, creating a more efficient and balanced portfolio.
For advisors looking to offer their clients exposure to clean energy and the growing AI sector, NLR is a compelling option. It provides diversified, global exposure to the nuclear industry, balancing the volatility of uranium mining with the stability of utilities. NRL is an ETF that offers both growth potential and stability, making it a smart addition to any portfolio focused on the future of energy and technology.
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