A Unique Means to Instant Uranium Diversification

The explanation of a vertically intergrated, international Uranium ETF.

I have written about the over productization of bank accounts and investment vehicles. Some have become toxic, some have become confusing and some have become ‘multiple-baggers.’ While I seldom specify any specific stock or ETF, Market Vectors-Nuclear Energy (NYSE ACRA:NLR) coincides with the need for diversification, aspect of vertical integration and my personal preference for nuclear energy. The Nuclear Energy ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the DAXglobal� Nuclear
Energy Index.

This ETF contains 22 positions from all facets of the “nuclear spectrum,” weighted approximately equally (~33%) among small-cap , mid-cap and large-cap companies. The index breakdown (as of 6/30/2010) is as follows:

Uranium Mining – 39.5%

Nuclear Generation – 23.1%

Plant Infrastructure – 19.3%

Uranium Enrichment – 5.3%

Nuclear Conglomerates – 4.5%

Uranium Storage – 4.5%

Nuclear Transportation - 3.7%

While this ETF provides a multi faceted index to equity size (market capitalization) and nuclear ‘sub-sectors’ (i.e. generation, transportation, etc.), it also spans many exchanges and countries. These equities would be extremely difficult and expensive to purchase individually.

As an example, for those casual investors who would like to purchase Areva, the world’s largest nuclear company, one would either have to purchase this from the Parisian exchange or purchase an ADR on the grey market. This symbol is OTC:ARVCF. The price (as of the close of 7/28/2010) is $465.00 and had a trading volume of 57 shares. To me, there is nothing more repelling than an extremely high priced share and almost no liquidity, and unless this is Birkshire Hathaway class A shares (on a bad day), 57 is like 0!

The country breakdown is:

United States – 29.2%

China – 27.3%

Germany – 21.7%

Taiwan – 10.2%

Norway – 7.8%

Canada – 3.3%

Spain – 0.5%
This fund or equity or ETF, whatever one chooses to call it, provides a great means to add instant diversity to one’s portfolio. While I do not advocate explicitly purchasing anything, and stressing that one understands everything one buys, this is worth further research.

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