ETF Chart of the Day: Norway
June 1st 2012 at 12:48pm by Paul Weisbruch, Street One Financial
A country that is located in the Eurozone geographically, but not part of the European Union that somehow evades attention from most portfolio managers is Norway.
Two ETFs that focus specifically on Norwegian equity index exposure are in existence, and cumulatively have attracted about $46 million since inception. Global X FTSE Norway 30 (NYSEArca: NORW), as its name suggests, tracks a FTSE index that intends to be a measure of Norway’s stock market. The fund debuted in November of 2011.
BlackRock launched iShares MSCI Norway Capped Investable Market (BATS: ENOR) at the end of January of this year, so the fund is still rather new to the marketplace.
Tracking the MSCI Norway IMI 25/50 Index, the ETF is also designed to give the investor broad based exposure to the equity market in Norway.
Head to head, the performance of both funds since’s ENOR’s inception on January 24 of this year are very close, with NORW losing 6.51% year to date and ENOR down 6.67%.
This can be compared to the MSCI Europe Index which is down 9.08% year to date as Norway has only a token weighting in this index.
Currently, ENOR is heavily skewed towards the Energy sector, as it makes up nearly 43% of the index basket, with Communication Services and Financials rounding out the top sector weightings at 8.36% and 7.76% respectively.
Top individual equity holdings in ENOR currently are Statoil ASA (20.72%), Telenor ASA (8.36%), Seadrill Ltd Common Stock (7.51%), DNB ASA (6.38%), and Subsea 7 Inc. (5.40%). NORW, similarly is over-weighted to the Energy sector, as it makes up more than 52% of the overall portfolio.
Financials, Communication Services, and Basic Materials collectively account for 32% of the remainder of the index as well. Top holdings currently in NORW are Statoil ASA (19.53%), Telenor ASA (9.99%), Seadrill Ltd (8.93%), DNB ASA (8.60%), and Subsea 7 SA (5.39%).
Both of these ETFs are down sharply off of recent highs (losing about 15% in the past month alone). As one can clearly see, there is significant overlap in these two ETFs in terms of what their top holdings and exposures are, so it will really come down to the portfolio manager doing their research and isolating which index methodology of the two gives them the “best” exposure to the country, as well as factors such as the expense ratio of the funds and potential index tracking issues and other items.
iShares MSCI Norway Capped Investable Market