However, for a number of funds in the IMA Europe ex UK sector that have outperformed in terms of total returns and lower volatility over the past 12 months, this exposure is alive and well.
Performance of MSCI Sweden, Finland, Norway, Denmark and UK over 1-yr
Source: Financial Express Analytics
According to Financial Express data there are 19 open ended retail funds exposed to all four key Nordic economies: Sweden, Finland, Norway and Denmark. Of the 15 that have outperformed the FTSE All Share over the past year, eight have outperformed the IMA Europe ex UK sector.
The top performer over the year to the end of September is Liontrust Continental Europe which returned 21.36 per cent. But, few funds, including this one, managed to beat the IMA sector average with less volatility.
| Fund | Combined area weighting S,F,N,D % |
| Jupiter European Special Situations | 15.74 |
| L&G Balanced | 1.94 |
| Lazard European Smaller Situations | 15.8 |
| Standard Life Investments European Equity Manager of Mangers. | 10.8 |
Source: Financial Express Analytics, Trustnet
None of these funds are among those in the sector raising most money over the past six months. Trustnet Alpha Manager Rob Burnett’s Neptune European Opportunities fund is one such. Sweden makes up just over 6 per cent of the portfolios, with Finland another 2.6 per cent.
Cazenove European is another, with Sweden making up 1.3 per cent. Neither fund would, however, offer exposure to all four Nordic markets while also bettering the sector average volatility, the data suggest.
So, will these markets deliver more going forward? Overall the outlook is mixed.
According to the latest company survey published by Sweden’s central bank this week, recovery from recession "is going to take time". The bank’s repo rate still sits at a lowly 0.25 per cent, with inflation currently at -1.6 per cent against an inflation target of 2 per cent.
Norway’s overnight lending rate is much higher – 2.25 per cent – but then the country has the luxury, as one of the biggest non OPEC exporters of oil and gas, of having built up a massive financial cushion. Norwegian central bank governor Svein Gjedrem noted in a recent outlook statement that oil prices have doubled since December 2008, and that oil futures have been rising rapidly on expectations of resumed global economic growth.
Finland and Denmark may also be subject to the winds of change in commodities pricing. Finland is a major player in timber and paper, while Denmark not only exports agricultural commodities, but also adds value to them via names such as Carlsberg.
There is another way to look at these markets. Location and history have resulted in each country encouraging the development of global firms that are strong in particular vertical markets. Statoil in Norway, Nokia in Finland and Atlas Copco in Sweden are all examples of this.
Thus although they may be locally base in terms of corporate headquarters, they are of a global reach in terms of manufacture, sales and distribution. If global economic growth picks up it stands to reason they could benefit from rising demand for their products and services pretty much everywhere. As a proxy for global recovery exposure to certain Nordic assets could then be a better way to buy lower volatility growth.