A Compelling Nuclear Energy Play

Last summer I wrote on RealMoney about the then-new Market Vectors DAX Global Nuclear Energy ETF(NLR Quote). Since listing, NLR has been successful at drawing funds, as it has increased to $197 million in assets, which is solid for such a new fund.

The case for nuclear was compelling when I wrote that first article and is all the more so now with oil trading well above $120. There are over 400 nuclear plants in the world with plans for that number to increase by 50% in coming years. If that trend plays out as people expect, then the stock's underlying nuclear energy funds will participate in that growth and presumably that should mean good things for the prices of these companies.

Last month, the PowerShares Global Nuclear Energy Portfolio(PKN Quote) came on the scene to provide some competition for NLR. There is some overlap between the two but there are some differences that could matter in the long term. For now, after just a few weeks of trading, the differences have not mattered at all.

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There aren't too many similarities, but they include 28% allocations to Japan (mostly industrial conglomerates that are one way or another involved with nuclear plant construction) and 12% allocated to France (split between Electricite De France and Areva).

The differences include PKN being much heavier in U.S. stocks at 35% vs. 20% for NLR, which seems to generally equal weight mining stocks at 33%, utilities at 32% and industrials at 30%. PKN allocates 47% to industrials, 24% utilities, 15% to mining/energy along with an almost 10% weight to technology.