On March 26, 2025, the GlacierShares Nasdaq Iceland ETF was launched. The ETF tracks the MarketVector Iceland International Index. The Index tracks each Icelandic corporations (54.5% of the index) and corporations in different Nordic nations which have a considerable footprint in Iceland (13% Luxembourg, 11% Norway, 7% Switzerland … adopted by the US and the Faroe Islands, about equally weighted). Iceland’s economic system is closely depending on only a handful of industries: vitality manufacturing, tourism, fishing, and smelting aluminum. (Smelt and smelting?)
The market cap of Iceland’s two inventory exchanges, the primary trade and the small/midcap trade, involves about €22 billion. That’s concerning the dimension of Darden Eating places. There are 28 corporations in the primary market and 5 within the rising market.
The expense ratio is 0.95%.
The Case for Iceland in your portfolio
(I can hardly consider I simply typed that)
Knowledge on the MarketVector index is scarce. The equal MSCI Iceland IMI index exhibits a fairly modest case for Iceland. Listed below are the five-year stats for MSCI’s Iceland index in opposition to a broad index of European shares and MSCI’s ACWI – developed + creating market – index.
| APR | Customary deviation | Sharpe ratio | Max drawdown | |
| MSCI Iceland | 7.9 | 21.2 | 0.34 | 39% |
| EURO STOXX | 9.0 | 19.5 | 0.3 | n/a |
| MSCI ACWI | 12.4 | 17.3 | 0.62 | 34.5 |
The Icelandic market suffered catastrophic losses throughout the International Monetary Disaster, together with a drawdown of practically 75%, with a systemic banking collapse described as “the most important of any nation in financial historical past.” Scandals, legal prosecutions, and reforms adopted.
Unquestionably, Iceland was not an awesome funding previously. That’s not shocking: smaller rising markets nations are inclined to get whipsawed in intervals of worldwide volatility, and the years for the reason that GFC certainly qualify. The argument for the fund is that the far north – Iceland, the Arctic, the Nordic states – may have a disproportionately higher position within the human future. There appear to be two units of arguments:
- Iceland is a extremely purposeful nation. The advisors spotlight the truth that Iceland is #1 on the Inexperienced Future Index (measuring clear vitality, innovation and insurance policies), #3 on the UN’s Human Growth Index, #1 on the World Financial Discussion board’s gender-equality rankings, #3 on the World Inhabitants Evaluation’s Happiness Index, and #1 globally by way of private security; it additionally derives 100% of its vitality from renewable sources. Their public debt is low and falling.
- Iceland’s corporations are positioned to thrive in an unstable, warming world. They’ve developed deep experience in renewable vitality sources reminiscent of geothermal and hydropower. They’re a world chief in creating sustainable fisheries, and there’s a strong demand for his or her merchandise. Considerable clear vitality and a talented workforce make them a sexy locale for knowledge facilities and different tech investments.
Collectively, these shares are doubtlessly undervalued as a consequence of low analyst protection, providing worth alternatives. As well as, the ETF provides broader publicity to Nordic shares. We’ve famous the argument for Nordic shares in our Launch Alert for CrossingBridge Nordic Excessive Revenue Bond. Over the previous decade, Constancy Nordic has returned 8.6% yearly, 300 bps higher than Morningstar’s world fairness index, which additionally speaks to the area’s potential.
What concerning the volcanoes?
Boy howdy, there are a bunch of them for good and unwell. These are a kind of blended blessing. Elevated exercise threatens infrastructure, can disrupt agriculture and fisheries, and spooks potential traders (a nasty factor in small, liquidity-sensitive markets). Some vacationers are drawn by them, others repelled.
On the similar time, elevated exercise with out catastrophic eruptions may improve the geothermal vitality potential of the island, improve Iceland’s attractiveness as a carbon-capture hub, and draw vacationers. At its base, Iceland builds volcanism into the equation: its infrastructure and social planning begin with the omnipresent actuality and construct from there.
Backside line
Iceland presents publicity to renewable vitality, sustainable industries, and post-COVID tourism restoration, interesting to ESG-focused and area of interest traders. Nonetheless, small market dimension, liquidity constraints, and sector focus require cautious danger administration. Buyers ought to prioritize long-term horizons and diversification.