It’s been quite a week for the ETF industry. Last Friday, Van Eck launched its Market Vectors Vietnam ETF (VNM), the first exchange-traded product to offer U.S. investors exposure to Vietnamese equity markets. Now New York-based Global X Management Company has launched the Global X FTSE Nordic 30 ETF (GXF), the first U.S.-listed fund to offer diversified exposure to Sweden, Finland, Denmark, and Norway.
GXF is designed to track an index maintained by FTSE Group that is comprised of the 30 largest and most liquid securities in the four Nordic nations. Nordea Bank AB, which has operations in all four of the aforementioned countries, is the fund’s largest individual holding, at just over 10%. The ETF’s holdings by country are:
| Country | Allocation |
|---|---|
| Sweden | 46.29% |
| Denmark | 19.52% |
| Norway | 17.32% |
| Finland | 16.87% |
The new Nordic ETF is a compelling investment for a number of reasons. First, its underlying index has outperformed the more broad-based FTSE Developed Europe Index by a wide margin:
| Time Period | Nordic 30 | Developed Europe |
|---|---|---|
| Five Years | 56.5% | 33.0% |
| Year-To-Date | 34.9% | 19.3% |
In addition, three of the countries covered by GXF ranked in the top six for global competitiveness in the World Economic Forum’s most recent Global Competitive Report. “In our view, the Scandinavian region offers a stable macroeconomic environment and a unique economic model that has historically produced higher returns than its European neighbors,” said Bruno del Ama, CEO at Global X Management. All four countries covered by the ETF receive AAA ratings with stable outlooks from Standard & Poor’s, a feat only 15 countries globally can claim.
Finally, the expense ratio charged by the fund makes it a very cost-efficient way to achieve diversified exposure to a promising group of developed countries. At 0.50%, GXF is significantly cheaper than many new foreign ETFs, and just below the 0.51% charged by the iShares MSCI Sweden Index Fund (EWD).
The introduction of GXF continues recent trends in the ETF industry. As the number of equity ETFs offering exposure to various corners of the U.S. markets has perhaps topped off, issuers are looking overseas for expansion opportunities, seeking out markets that have sufficient liquidity and investor protection, but are not readily accessible by U.S. investors. The introduction (or filing for approval) of EPU, YAO, and GXF are but a few examples of international ETF expansion.
Global X also offers the Global X/InterBolsa FTSE Colombia 20 ETF (GXG), the only exchange-traded fund focusing exclusively on Colombian equities.
View the fact sheet for the new ETF here.
Disclosure: No positions at time of writing.
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