Equity: Norway - Total Market
Choices are even narrower than they appear in the ETF market for Norway's equity.
Following an index change by NORW in July 2014, both NORW and ENOR track the same index.
“NORW and ENOR track the same index... and NORW has the edge” Fortunately, it's a good one from a pure beta point of view offering traditional, market-cap based exposure. Norway is an extremely concentrated equity market dominated by Statoil and other energy plays. The funds can't fully capture our benchmark's concentration, as RIC diversification requirements cap exposure to the largest names. Nonetheless, the portfolios are highly concentrated. Each allocates approximately 15% of its portfolio to Statoil and about 2/3 of portfolio assets in the top 10 holdings.
Given that the funds share the same portfolio, costs and risks from owning and trading the funds are the only real distinction. The two funds charge similar fees—close enough in fact to be ignored as a point of comparison. Tracking differences would typically help to guide investors regarding true holding costs, but NORW's use of fair value NAV's greatly distorts the record. ENOR tracks its index well but lacks investor interest. Both funds trade lukewarmly. In all, NORW's new and improved basket, in combination with its asset advantage and moderately better liquidity, gives it an edge over ENOR. (Insight updated 09/22/17)
ETF.com Efficiency Insight
NORW and ENOR rank similarly in Efficiency. Both funds have their drawbacks, with neither one being a clear standout.
Both funds charge similar fees, though tracking data shows that
“neither fund is a clear standout” ENOR has been cheaper to hold long-term, likely due to Blackrock's efficient securities lending program. NORW's tracking data shows significant variability, though this is likely exaggerated by the issuer's use of fair value NAVs.
Neither fund has a large asset base, though ENOR's is particularly thin. We don't currently see elevated closure risk for either fund, but both warrant regular monitoring. (Insight updated 09/22/17)
ETF.com Tradability Insight
NORW is easier to trade than ENOR, but only marginally. ENOR sees lower volume and wider average spreads, but neither fund is particularly easy or cheap to trade. Limit orders are strongly
“NORW is easier to trade than ENOR, but neither are very liquid.” recommend in either case. Be careful, though: Setting limit orders too aggressively could result in the market moving against you and your orders expiring unfilled.
Large traders in either fund should be able to execute at a reasonable price with the assistance of a market maker. NORW has higher creation costs, but ENOR's creation unit has twice as many shares as NORW's creation unit (and a higher NAV), which impedes creations and contributes to larger premiums and discounts to NAV. Keep these costs in mind when determining the best way to execute your order. (Insight updated 09/22/17)
ETF.com Fit Insight
NORW and ENOR both offer comprehensive, neutral—and now, identical—representations of Norway's equity market (subject to RIC diversification requirements).
“In July 2014, NORW began tracking the same index used by rival ENOR” 2014, NORW began tracking the same index used by rival ENOR. While less choice isn’t typically welcome, the newly common underlying index is solid with respect to marketlike coverage.
Still, marketlike hardly means riskless. The ETFs are concentrated in their top holdings with about 2/3 in the top 10 names. Single-name blow-up risk appears in the form of Statoil, and the ETFs make heavy (but marketlike) allocations to energy.
Overall, NORW and ENOR offer the best representations of the Norwegian equity market that are possible to get in ETF form. (Insight updated 09/22/17)