In this month’s roundup of the best and worst performing exchange traded products (ETPs), the uranium sector is by far the biggest winner, according to Morningstar data.
In our top 12 for September, Sprott Uranium Miners UCITS ETF Acc (URNM) gained almost 29% and topped the list (again), followed right away from the Global X Uranium UCITS ETF USD Acc (URNU LN).
The uranium market was disrupted by the outbreak of war, because Ukraine depended heavily on Russian uranium. Following the invasion, Ukraine, where there are 15 reactors, rushed to sign a 12-year supply agreement with Canada. Meanwhile, operators in Finland and Eastern Europe were hit the hardest as they owned Russian-made reactors – which only Russian companies knew how to supply. It took a year to find an American competitor capable of packing the uranium rods into the hexagonal blocks required by these plants.
Nuclear power is also making a strong comeback in the energy programs of many countries in reaction to the energy crisis. In the US, for example, the ADVANCE Act was recently introduced. This is a bill that aims to support initiatives to develop and deploy new nuclear technologies both domestically and abroad, through actions such as facilitating the conversion of conventional energy sites, and providing regulatory support for the development of advanced nuclear technologies.
But there are other examples too. In June, France announced a commitment of more than €100 million to revitalise the nuclear industry. Canada is after a 30-year hiatus reviving its nuclear production. And there is strong strong interest for nuclear in emerging countries: Turkey has declared its intention to develop 20 GW of nuclear power by mid-2050, while further east, Pakistan is working with China to move away from its dependence on fossil fuels. Saudi Arabia is also considering an offer from a Chinese state-owned company to build a nuclear power plant.
Moving on, there are no less than six ETCs with various exposure to oil, which reached a 10-month high at $95 per barrel (Brent) on September 19, as the supply shortage seems to have had the desired effect. This is mainly caused by the ongoing actions to tighten the oil market taken by Saudi Arabia and Russia over the last few months, driving a large supply deficit.
Morningstar analysts believe that it remains to be seen if the 1.3 million barrels per day in cuts from the two countries will be extended deeper in 2024, much of which will depend on the level of oil prices, and whether it be enough for Saudi Arabia’s spending needs. A more tepid Chinese oil demand outlook is certainly driving Saudi Arabian and Russian decision-making as well.
Stephen Ellis, senior equity analyst at Morningstar, commented: “The EU’s storage position is in excellent shape, but it cannot rest on its laurels. The gas market has been extremely volatile in response to potential lost gas supply, and we remain concerned about the impact of strikes, hurricanes, and a very cold winter.”
Worst Performing ETFs in September
The ranking of the worst performing ETFs in September, on the other hand, is topped by Electric Vehicle Charging Infrastructure UCITS ETF Acc (ELEC), which shed 17%. The strategy was particularly affected by the possibility of the EU introducing punitive tariffs on Chinese electric cars in order to protect European manufacturers – an assumption that weighed on the entire industry, and particularly on Chinese companies.
Global X Blockchain UCITS ETF USD Acc (BKCH) follows, with 13% of its value lost over the month. Overall, there are five positions occupied by thematic strategies exposed to digital assets and blockchain, confirming once again the difficult time the entire sector is experiencing. The entire industry is going through a phase of high uncertainty, fuelled in particular by the wait for the US Securities and Exchange Commission’s (SEC) decision on Bitcoin spot ETFs in the US.
Finally, emerging stock markets like Vietnam, Poland, and Greece lost between 7.5% and 8% last month.
The Biggest ETFs
Monthly top and flop performers often coincide with very volatile and therefore risky products, which should play a satellite role in your portfolio. As such, we also include an overview of the biggest European-domiciled ETPs in terms of assets, which could be more appropriate to consider among core holdings. Performance in September 2023 range from +4.3% for the iShares $ Treasury Bond 0-1yr UCITS ETF USD (IB01), down to the iShares Core FTSE 100 UCITS ETF GBP (ISF), which lost 1.6%.
Methodology
According to Morningstar data, there are around 45 percentage points between the best and worst performing Exchange-traded products (ETPs) in September, with returns for the month ranging from 28.6% to negative 17%.
We have looked at the key trends in the ninth month of the year, excluding inverse and leveraged funds. These instruments, being purely passive products, reflect the evolution of the markets without the bias (good or bad) of an active manager.
