First Nordic ETF To Take On Active Mutual Fund Field

By
August 18, 2009
Share:

Related ETFs

Ticker Fund name
GXGGlobal X MSCI Colombia
Related ETF Lists
Latin America ETFs

Global X Nordic ETF tracks a FTSE index that's clobbering its actively managed rival.

 

The first pure-play exchange-traded fund focused just on the Nordic region of Europe is set to launch on Wednesday.

And if past performance is any indicator, the new index-based ETF should prove to be a worthy challenger to the other main Nordic-centric contender competing for fund investors’ dollars. (See table below.)

The Global X FTSE Nordic 30 ETF (NYSEArca: GXF) will charge an expense ratio of 0.50%. It tracks a long-standing benchmark for Nordic markets created and maintained by the FTSE Group. The 30 largest companies by market-cap size and liquidity in the region are included.

While this will be the first ETF launched in the U.S. for Nordic companies, there’s actually an actively managed mutual fund focusing on the region. That’s the Fidelity Nordic Fund (FNORX). It has an expense ratio of 1.09% per year – more than double what the ETF is charging.

How’s it doing compared to GXF’s underlying index? In the past five years through July 31, it had gained 7.51% on an average annualized basis. That compared to the FTSE Nordic 30 Index’s 9.40% average annualized return in the same time period.

The FTSE Developed Europe Index had an average annualized return of 5.90% during that time, according to FTSE data. Meanwhile, the S&P 500 lost 0.10% in that period.

Here’s a table of the average annualized returns for each index and the Fidelity mutual fund through July:

 

Period

FTSE Nordic 30 Index

FNORX

FTSE Developed Europe Index

S&P 500 Index

YTD

34.90%

27.46%

19.30%

11.00%

12-Month

-26.10%

-33.63%

-24.60%

-20.00%

3-Year

-2.00%

-5.91%

-4.90%

-6.20%

5-Year

9.40%

7.51%

5.90%

-0.10%

Source:s Fidelity, FTSE Group, Thomson

 

What's so hot about Nordic economies as a region?

“The global leadership in innovation and training of the Nordic workforce positions the region to continue to capture the growth opportunities of the global economy in the future,” said Bruno del Ama, Global X's chief executive.

Denmark, Sweden and Finland are all listed as the top three countries in terms of higher educational systems and employee training programs in the world by the World Economic Forum, del Ama added.

The index is rebalanced semiannually. Most of the component companies are listed on local exchanges and not available directly through U.S. listings. The benchmark includes caps on how big one component company can be at any given time. The largest company at the end of July was Sweden's Nordea Bank, at 10%.

Other leading names were: Novo-Nordisk (8%); Nokia (8%); Ericsson (8%) and Norway’s Statoil Hydro (7%).

GXF will represent the second ETF that the New York-based start-up Global X is sponsoring. In February, its first fund came out, the Global X/InterBolsa FTSE Colombia ETF (NYSE Arca: GXG). Besides the Nordic region, the firm has plans to enter at least four more different emerging markets. (See related story here.)


ETF.COM CHANNELS

Want to learn more about smart-beta ETFs? Check out our smart-beta guide, essentials library and ETF screener!

ETF DAILY DATA

International equity funds like 'IEMG' led inflows on Monday, May 18, as rising markets lifted U.S.-listed ETF assets to a record $2.174 trillion.

'SPY' and 'GLD' paced SSgA's issuer-leading outflows on Monday, May 18, as rising markets lifted total U.S.-listed ETF assets to a record $2.174 trillion.

ETF.COM ANALYST BLOGS

By Olly Ludwig

Yields will one day head higher, so is it time to get bond exposure outside the U.S.?

By Rachael Revesz

Stop dancing around the subject, call women ‘women’ and let’s be a more visible part of this industry.

By Olly Ludwig

It’s no secret that hedge funds love ETFs, but what’s less appreciated is that their love of ETFs will likely spell their demise.

By Olly Ludwig

Yes, bond yields are ticking higher these days, but it’s important to keep the whole yield-curve picture in mind.

ETF INDUSTRY PERSPECTIVE

By Nasdaq Global Indexes

Bond exposure or bond performance? Only defined maturity indexes provide the latter.

By Invesco PowerShares

Invesco PowerShares and Market Strategies International’s second annual survey provides vital insights about smart beta and ETFs overall.

By Invesco PowerShares

Investors are implementing smart-beta exchange-traded funds (ETFs) in their portfolios in a variety of ways and for different reasons.