Off the wires: Fusion energy breakthrough by US scientists boosts clean power hopes

High energy prices have been a norm for 2022 with consistent pressure from the Russia-Ukraine conflict as it leans into the 300th day mark, while others are feeling the “need to rapidly move away from burning fossil fuels to stop average global temperature reaching dangerous levels.”

Along this path, the US made a major breakthrough in the fourth quarter by producing a “net energy gain” from a fusion reaction, meaning more energy was generated than used to start the fusion process. Likewise, this process results in “no long-lived radioactive waste” and emits no carbon, a drastic climate-friendly change to the typical nuclear power plants. 2023 and the years to come will continue to be a “global race for next-generation clean technology” and energy.


View from EPFR

With the potential for clean, limitless energy on the horizon, isolating elements and components within Energy Sector Funds gives us clues into investor sentiment – are they buying into these new ideas already? Uranium is one of the main ingredients in fueling power plants for nuclear fission – the splitting of atoms – while hydrogen is a key component of nuclear fusion – the process of joining atoms – but both generate significant amounts of energy.

Chart representing 'Weekly Cumulative Flows for Energy Sector Fund subgroups, for year to date'

Throughout 4Q21 and at the start of the Russia-Ukraine conflict in February of this year, Nuclear and Uranium Funds saw a significant spike in the level of money committed, with flows as a percentage of AuM climbing 47% YTD. They started off 2022 with a 17-week inflow streak that attracted $1.6 billion total and captured multiple record-setting weekly inflows since EPFR started tracking them in 3Q07. Sentiment has died down since then with the latest four weeks in negative territory.

Flows into Hydrogen-related funds have seen comparatively the highest level of commitment out of all the subgroups rising 70% in AuM thus far this year and Natural Resources have attracted the most flows in dollar terms. Understandably, Oil dedicated funds were the only group to post net redemptions in 2022.

Big producers of uranium – Kazakhstan, Canada, Australia, Russia – could be hurt by the shift in the way we source energy and likewise, countries that rely solely on nuclear power plants for electricity – Lithuania, France and Slovakia – could benefit in the decades to come if they are supplied with alternative, cleaner energy. “A small cup of the hydrogen fuel [from nuclear fusion reactions] could theoretically power a house for hundreds of years.”

Chart representing 'Yearly Flows for Energy Sector Fund subgroups, from 2018 to year to date'


Did you find this useful? Get our EPFR Insights delivered to your inbox.

Related Posts

Off the wires: Bitcoin is one year away from a major technical event. History suggests the start of another bull run

Off the wires: Bitcoin is one year away from a major technical event. History suggests the start of another bull run

Bitcoin’s next “halving” is expected to take place in 2024. These events take place when Bitcoin miners have added 210,000 “blocks” to the blockchain leger and are marked by a halving of the Bitcoins that miners get for adding each block. Given the implications for future supplies of Bitcoin, these ‘halvings’ usually push Bitcoin’s price significantly higher, both in the run up to the event and for several months afterwards. This time around seems – so far – to be conforming to the pattern: Bitcoin’s price has risen steadily in recent weeks.

Off the wires: US inflation falls to lowest level since May 2021

Off the wires: US inflation falls to lowest level since May 2021

According to CNN, annual inflation dropped in March 2023 for the ninth consecutive month, and grocery prices fell month-on-month for the first time since September 2020. While the CPI has cooled off – at least temporarily – investors are not treating the news as a green light for the road back to riskier asset classes. With fear far from banished, cash remains king.

When ETF flows confound expectations

When ETF flows confound expectations

From time to time, EPFR’s clients alert us to anomalous flows into exchange traded funds (ETFs) that occur on a specific day and for a specific fund. Given our awareness of these types of flows, and the granularity of our databases, EPFR’s quant team decided it was high time they dove into our ETF database and conducted a systematic analysis of these events.

Better, More Actionable Insights

Let us show you how EPFR can create value for your specific strategy


*Indicates required fields

By ticking this box, you agree to receive marketing communications from EPFR. You can review your email preferences upon submitting this form