The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  Sprott Junior Uranium Miners ETF to a Morningstar Medalist Rating of Neutral.  The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.  

 The team managing the passive strategy earns a Below Average People Pillar. The strategy gets an Average Process Pillar rating.  Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. The strategy's parent organization earns the firm an Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

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Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. Sprott Junior Uranium Miners ETF earns an Average Process Pillar rating. The leading factor in the rating is that this fund tracks an index. Historical data, such as Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Low expenses across its parent firm's funds, whose fees, on average, rank in the middle quintile of their respective category, also influence the rating. The pattern of low costs at the firm suggests that it is focused on delivering strong results for investors. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 43%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the Nasdaq Sprott Junior Uranium Miners Index.  The fund will, under normal circumstances, invest at least 80% of its total assets in securities of the index. The index is designed to track the performance of companies that derive at least 50% of their revenue and/or assets from (i) mining, exploration, development, and and production of uranium; (ii) earning uranium royalties; and/or (iii) supplying uranium. The index generally consists of from 30 to 40 constituents. The fund is non-diversified. 

 The portfolio is overweight in energy by 61.4 percentage points in terms of assets compared with the category average, and its financial services allocation is similar to the category. The sectors with low exposure compared to category peers are basic materials and industrials, underweight the average by 36.9 and 10.6 percentage points of assets, respectively. The portfolio is positioned across 35 holdings and is relatively top-heavy. Of the strategy's assets, 76.4% are concentrated within the top 10 holdings, compared to the category’s 25.3% average. And in closing, in terms of portfolio turnover, on a year-over-year basis, 62% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Average

Process

Sprott’s team receives a Below Average People Pillar rating. The team is bolstered by the combined average five-year excess return of each manager, which suggests that the funds they manage have surpassed an average manager. However, the rating is weakened by the parent firm's five-year success ratio of 30%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup. The parent firm's five-year retention rate of 50% also holds the team back.

Below Average

People

Sprott's focus on a niche area of the market and some mixed characteristics lead to an Average Parent rating.
This firm has undergone several changes in the past five years. In 2017, the firm spun off the non-precious-metals vehicles it had launched over the prior decade, and founder Eric Sprott retired. Getting back to its roots, the firm has since consolidated one of Canada's gold exchange-traded funds into its own and acquired a gold ETF, a silver ETF, and a U.S.-based, actively managed open-end mutual fund focused on gold-mining stocks. Sprott has recently expanded its lineup to include critical minerals, namely a uranium ETF and a physical platinum and palladium trust, but the firm remains largely focused on precious metals.
A relatively deep investment team manages this niche lineup. In 2022, 25-year industry veteran John Ciampaglia took over as Sprott Asset Management's CEO from Whitney George after George became Sprott Inc.'s CEO. That said, George remains involved in investment management, and an experienced 12-person team remains, including John Hathaway and Doug Groh, who came aboard as part of the firm's 2020 acquisition of Tocqueville's gold strategies. These resources could give the firm an edge, but key-person risk remains given the long tenures of Hathaway and George. Further, the firm's niche focus creates potential for large swings in both assets and performance.

Parent

Sprott Junior Uranium Miners ETF

URNJ seeks to track an index of small cap uranium miners around the globe, primarily those with revenues tied to the uranium mining and uranium industry. Securities are selected using a fundamental, proprietary methodology and weighted by market cap.

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Sprott Junior Uranium Miners ETF has grown from $2M in total assets at its launch in February 2023 to 341M in total assets now. URNJ is up 29% from inception and 90% from the March-May lows last year. URNJ has outperformed URNM in 2024 and has had significant inflows, while URNM has seen outflows this year.

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While the demand for nuclear energy continues to pique the interest of certain nations around the globe as an alternative energy resource, supply woes for uranium are pushing the metal to 16-year highs. This certainly bodes well for bullish investors, and also opens up opportunities for miners as demand continues to ramp up.

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The Sprott Junior Uranium Miners ETF has underperformed the larger uranium mining ETFs due to the absence of top-performing stocks like Yellow Cake, Uranium Trust, Cameco, and Kazatomprom. URNJ recently underwent a messy rebalancing, with Kazatomprom being temporarily added and then removed from the ETF. Historical behavior suggests that small and mid-size uranium miners are likely to catch up and outperform in the near future, especially with potential catalysts like a Senate vote to ban Russian uranium imports.

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