New ETF Gives Investors Denmark Exposure

NEW YORK ( TheStreet) -- ETF provider iShares rolled out another Scandinavian ETF with the iShares MSCI Denmark Capped Investable Index Fund ( EDEN).

It comes hot on the heels of similar iShares funds for Norway and Finland. Another iShares ETF, the iShares MSCI Sweden Index Fund ( EWD) has been around for a long time.

In all of these ETFs, one holding dominates. In the case of EDEN, it is insulin manufacturer Novo Nordisk ( NVO), which accounts for 22% of the fund.

Investors may also recognize Danske Bank and shipper AP Moeller-Maersk, each of which has a 7% weighting, and beermaker Carlsberg, which has a 5% weight.

Given NVO's weight in the fund it is not surprising that health care is the largest sector at 34%, followed by industrials at 27% and financials at 16%.

The article I wrote recently about the iShares MSCI Finland Capped Investable Index Fund ( EFNL) took a skeptical view on Finland because it uses the euro as its currency.

The country has very good fundamentals but stands to be held back if the euro continues to flounder, which seems likely given the latest bond market action in Portugal.

Denmark, on the other hand, stuck with its own currency, the krone. Norway and Sweden also avoided adopting the euro as well. All of the Scandinavian economies are relatively healthy, with very low debt-to-GDP ratios and very low current account deficits. In Denmark's case, its debt to GDP is around 40% and its budget deficit was 3.8% in 2011.

The relative health of these economies means that these countries' central banks and finance ministers don't need to resort to desperate action that might distort markets and have harsh consequences in the future. There may or may not be a dire outcome from rates at zero and other liquidity measures in the U.S. and Europe, but investors in the Scandinavian countries don't need to try to figure out what these consequences might be or how to mitigate them.

One note about the Denmark ETF and the other new Scandinavian funds is that there is little to no trading volume in these funds. Given the volatility of the large holdings that dominate these funds -- NVO in the Denmark fund, Statoil ( STO) in the MSCI Norway Investable Capped Index Fund ( ENOR) and Nokia ( NOK) in the Finland ETF -- there is probably going to be enough volatility to make them attractive trading candidates, but for now there is not enough volume to make them tradable.

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