Funds News

KDB Asset to launch nuclear energy fund soon

HONG KONG (Reuters) - Banking on the increasing popularity of nuclear energy as an alternative to carbon-based power, KDB Asset Management plans to launch a fund to invest globally in nuclear power companies.

The asset management arm of state-owned Korea Development Bank sees firms producing uranium and utilities that operate nuclear power stations as good investments for the long term as governments seek viable and carbon-free alternatives to traditional sources of energy.

“As countries diminish carbon emissions, there’s going to be momentum for using nuclear as it is cheaper compared with other alternative energy options like solar or geothermal,” said Jong-Yuk Kim, who manages KDB’s green-themed funds.

KDB Asset manages 15.6 trillion won (7.7 billion pounds) worth of assets.

The new fund, expected to be launched in the next few weeks, will be KDB Asset’s third to focus on the green theme and will be sold to South Korean investors.

“Clean energy will soon be viable energy, considering the pace of technology development and the upward trend of oil prices,” Kim said.

KDB's nuclear fund will track the S&P Global Nuclear Energy Index .SPGTNE which is made up of 24 of the largest publicly traded companies in nuclear energy related businesses.

Canada's Uranium One Inc UUU.TO, Australia's Paladin Energy Ltd PDN.TO, and Exelon Corp EXC.N of the United States were among the companies the index tracked as of December 31.

Germany's E.ON AG EONGn.DE, Tokyo Electric Power 9501.T and Electricite de France EDF.PA also belong to the index.

KDB launched a clean energy fund worth 18.2 billion won in 2007, tracking the S&P Global Clean Energy Index. It launched a smaller 6.62 billion won fund focusing on the water sector that tracks S&P Global Water Index.

Both indices have fallen more than 30 percent since April 2007.

For the new fund, Kim expects it to be “about the size of its water fund or bigger, but no larger than its clean energy fund.”

Nuclear energy is seen by proponents as an attractive alternative to conventional power because it can offer baseload electricity without carbon dioxide emissions that come from fossil-fuel natural gas and coal power plants.

However, worries about safety and the handling of radioactive waste from nuclear power have plagued the industry’s growth.

The International Energy Agency estimates the nuclear share of global electricity generation will increase to 22 percent in 2050 from 16 percent now. China is among the most ambitious nuclear investors, with plans to quadruple its nuclear power capacity in the next decade to about 40 gigawatts.

Editing by Lincoln Feast