BNP Paribas’ THEAM Quant fund range (a collaboration between BNP Paribas Global Markets and BNP Paribas Asset Management) has launched a dedicated nuclear energy UCITS fund, in an area that the firm sees as a multi-decade investment opportunity driven by growing global electricity demand and energy security concerns.
The new fund represents the latest addition to the group’s thematic strategies developed in collaboration with Exane – the equity research firm fully acquired by BNP Paribas in 2021. Unlike some competing products in the market heavily concentrating on uranium miners, BNP Paribas’ approach takes a broader view of the nuclear energy ecosystem through a “three-pillar framework”.
“A number of approaches focus on the uranium side, essentially linking financial characteristics to uranium prices,” said Vincent Berard, Head of Product Strategy for the THEAM Quant funds range at BNP Paribas Global Markets. “We’ve had feedback from investors that this was interesting but under representative of the nuclear sector.”
Instead, the long-only, high-beta strategy balances exposure across the entire value chain: uranium mining and enrichment; energy generation including power plant construction and operations; and specialised engineering and services. No pillar can represent more than 50% of the portfolio to maintain diversification.
Despite its European roots, the fund’s holdings skew heavily towards North American and Asian companies. The firm positions itself as providing a distinctly European perspective on nuclear investing – one that incorporates stringent ESG standards and regulatory awareness – in a sector currently dominated by North American players.
“There is sometimes a bit of relief from investors. Finally, we get a European approach with European standards in terms of ESG and corporate responsibility,” Roberto Bartolomei, Head of Alternative and Quantitative Investment Solutions Fund Sales, added.
Berard, who oversees the strategy’s development with Exane’s research team, notes that the investable universe has grown by more than 30% over the last year or so, to around 140 companies today. The final portfolio comprises 20-25 names, primarily from North America and Asia, with limited European representation – though this may evolve to capture the market potential over time.
Liquidity in the sector has improved significantly, with daily trading volume in the investment universe doubling from $30m to $60m over the past six to nine months, according to Frank Megel, Head of Exane Equity Research Database and eProducts.
The fund’s stock selection starts with Exane’s fundamental analysis, which is then systematised through natural language processing techniques scanning communications from over 3,000 companies. This creates a thematic score that measures nuclear exposure intensity. Unlike purely algorithmic approaches, human analysts add a “relevancy” layer to the final scoring.
“The most difficult part is going from what the analysts are thinking to something which is systematically calculated and rule-based,” Megel explained. “We are digitalising what the analysts are looking for.”
Additional financial filters screen out expensive stocks, those with worst earnings momentum, or limited growth prospects. Approximately 90 companies from the initial universe are eliminated through ESG and financial filters, leaving the strategy with around 60 investable names.
BNP Paribas sees capacity for the strategy at approximately $300m initially, which they expect to reach within two years based on current investor interest. The firm indicated they may be able to adapt position sizing to accommodate additional capacity, especially as this market sector grows and becomes more liquid.
While nuclear energy has historically faced public relations challenges, Berard observes a fundamental shift in perception: “The anti-nuclear lobby has been very strong over the last fifteen years, even in France. Things are different now.”
The investment case rests on projected electricity demand increasing by 130% by 2050 (as per the IEA’s Announced Pledges Scenario), driven by building electrification, transportation needs, industrial processes, and data centres powering AI applications.
“If you look at the past 20 years, electricity demand was flat in US and EU,” Megel noted. “We see now the start of a new era with electrification needs. It’s not only driven by AI – everyone is talking about AI at the moment – but buildings, transportation, industry… the way you produce goods is massively switching from fossil energy to electricity.”
The fund carries Article 8 classification under SFDR, promoting environmental and social characteristics while maintaining a carbon footprint 20% below its initial investment universe.
