NUKZ ETF: A Differentiated Approach to Investing in the Nuclear Fuel Cycle

The Range Nuclear Renaissance Index ETF (NUKZ) offers investors exposure to the nuclear fuel cycle through a differentiated approach. Launched on January 23, 2024, the fund has $494mm in net assets. NUKZ provides a unique investment opportunity for those interested in the nuclear energy sector, with its focus on the various aspects of the uranium lifecycle.

Title: The Range Nuclear Renaissance Index ETF (NUKZ): A Differentiated Approach to Investing in Nuclear Fuel Cycle

The Range Nuclear Renaissance Index ETF (NUKZ), launched on January 23, 2024, offers investors a unique opportunity to gain exposure to the nuclear energy sector through a differentiated approach. With $494 million in net assets, NUKZ provides a diversified investment strategy that focuses on various aspects of the uranium lifecycle [1].

NUKZ is a sector-specific exchange-traded fund (ETF) that aims to provide investors with exposure to the nuclear energy industry. The fund is indexed to the Range Nuclear Renaissance Index, a market index designed to provide exposure to the complete uranium fuel cycle. The index is comprised of various sectors, including advanced reactors (30%), utilities (30%), construction & services (35%), and fuel (20%) [1].

One of the key features of NUKZ is its diversification across the nuclear fuel cycle. This strategy allows investors to gain exposure to a wide range of companies involved in the nuclear energy industry, rather than concentrating assets into a single sector. The fund has 44 individual holdings, including companies that develop advanced reactors, utilities, construction & services, and fuel [1].

NUKZ is a passively managed ETF, which means it is designed to track the Range Nuclear Renaissance Index without deviation in terms of security selection and weightings. This strategy allows investors to benefit from the long-term growth potential of the nuclear energy industry while minimizing the risks associated with active management [1].

Despite its diversified approach, NUKZ has exhibited some tracking error, deviating from the index by roughly 33.70% in 1-year performance. Additionally, the fund has a relatively high fee of 85 basis points (bps), which may pose some risk to cost-in/cost-out [1].

The top constituent in NUKZ is Cameco Corp. (CCJ), with a portfolio weight of 10.20%. Cameco is one of the largest global uranium mining companies, accounting for roughly 9% of global production in 2021. Another major holding within NUKZ is Constellation Energy (CEG), an electric utility company, making up 8.48% of the total portfolio weight [1].

Investors should note that NUKZ is not designed for income distribution. The fund pays out a small distribution of $0.04 per share, yielding roughly 0.06% on a trailing 12-month basis. Given the recent launch of the strategy, the distribution rate may not be an adequate gauge for deriving value from the ETF [1].

In conclusion, the Range Nuclear Renaissance Index ETF (NUKZ) offers investors a differentiated approach to investing in the nuclear fuel cycle. With its focus on diversification and long-term growth potential, NUKZ can be a valuable addition to the portfolios of individual and institutional investors seeking exposure to the nuclear energy industry. However, investors should be aware of the fund's tracking error, high fees, and lack of income distribution.

References:
[1] https://seekingalpha.com/article/4813173-nukz-can-provide-investors-with-differentiated-approach-to-investing-in-nuclear-fuel-cycle