ETF Expert

In the White House, you have an exceptionally strong advocate for cleaner energy. President Obama frequently touts the virtues of the nuclear option.

Overseas, China has become surprisingly active in clean energy development. Estimates suggest that the country is spending $110 billion annually on clean energy development, with a stated goal to make renewable energy account for 15% of its total by 2020.

Based on supply, demand, “polita-speak,” and potential for business profit, one might think that the lights would turn on inside investors’ heads. For instance, Western and Eastern suppliers are already responding to the trend towards greater nuclear energy in the world’s 2nd/3rd largest economy, China.

And there’s more.

There are nearly 100 plans for new reactors around the world today, from Russia (with love) to India to Japan. Also, according to Rebecca Smith at WSJ, McDermott International and the Tennessee Valley Authority are pushing for commercial use approval on a small-sized nuclear reactor in the U.S. (Decades have gone by without new nuclear plants in the U.S.)

So with all of the momentum, why does Market Vectors Nuclear Energy (NLR) struggle below a 200-Day moving average? And shouldn’t an investor be able to anticipate greater capital appreciation from a sub-sector fund (i.e., global nuclear energy) over a broad global index like the iSharesGlobal 100 Index Fund (IOO)?

There are other nuclear energy ETFs to choose from. However, both PowerShares Global Nuclear Energy (PKL) as well as iShares Global Nuclear Energy (NUCL) have been around less than 2 years; both have less trading volume and assets than NLR; both are highly correlated to NLR at this point in time; all 3 nuclear options have underperformed the iShares Global 100 Index (IOO) since respective inception.

There is one positive thing that an investor might be able to say about nuclear energy. It has performed about as well as traditional energy in iShares Global Energy (IXC); moreover, Nuclear Energy (NLR) has outhustled Global Wind (FAN), Global Solar(TAN) and Global Alternative Energy (GEX) over similar time frames.

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