VanEck wide moat ETF passes $1bn AUM

Apr 25th, 2017 | By | Category: Equities

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The VanEck Vectors Morningstar Wide Moat ETF (NYSE: MOAT) is celebrating five years since its launch along with passing the $1bn assets under management threshold for the first time.

VanEck wide moat ETF passes $1bn AUM

In the year to 31 March, MOAT returned 23% compared to the S&P 500’s 17%.

The ETF tracks the performance of the Morningstar Wide Moat Focus Index which consists of US-listed equities that are considered by analysts at Morningstar to have “wide economic moats” – a significant and sustainable competitive advantage over peers.

The term was coined by Warren Buffett and may refer to firms who have established a competitive advantage through brand loyalty, high switching costs, network effects, regulatory protection or economies of scale, for example.

Of the starting broad equity universe, approximately 10% of constituents are thought to possess a wide moat. Potential constituents are further narrowed down by selecting those securities with attractive valuations.

The final index is comprised of at least 40 companies that are equally weighted and rebalanced quarterly. There are currently 48 companies in the index, including Amazon, Salesforce, Visa, Eli Lilly and Allergan. The largest sector represented is health care with 35% of the portfolio weight, followed by consumer discretionary with 22%.

Ed Lopez, head of ETF product development and marketing at VanEck said: “When we brought MOAT to market, we felt strongly that we were providing investors with an intelligently designed ETF that provided exposure to an intuitive and proven approach to equity investing.

MOAT has returned 23% in the year to 31 March, compared to 17% by the S&P 500 Index.

“Identifying great companies and buying them at attractive prices has long been a mantra of successful investors, and we believe that Morningstar’s index methodology and research capabilities, combined with the low cost, highly liquid format of an ETF, have helped drive the =fund’s strong performance over the past five years and helped MOAT gain traction with investors.”

There is a UCITS version of MOAT available to European investors – the VanEck Vectors Morningstar US Wide Moat UCITS ETF (LON: MOAT), which tracks the same index as MOAT and has AUM of $17m. Both the US and Europe-listed ETFs have total expense ratios of 0.49%.

VanEck also offers the VanEck Vectors Morningstar International Moat ETF (NYSE: MOTI), which tracks an index using the same methodology applied to firms outside the US. The fund currently has 73 holdings with the top sectors being financials (16%), health care (16%) and industrials (12%), while the largest country weights are China (18%), Australia (17%) and Singapore (11%). MOTI has AUM of $41 million with a TER of 0.56%.

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