• ETFs

    June Gains Extend Moats’ YTD Strength(1)

    01 August 2017
     

    For the Month Ending June 30, 2017

    Performance Overview

    June was a strong month for moat investors. Both moat-focused indices outperformed their respective broad market indices, and finished the first half of the year ahead by more than 4 percentage points. The U.S.-oriented Morningstar® Wide Moat Focus IndexSM (MWMFTR, or "U.S. Moat Index") posted strong relative returns versus the S&P 500® Index in June (2.87% vs. 0.62%) extending its outperformance for the year-to-date period (13.86% versus 9.34%). International moat stocks, as represented by the Morningstar® Global ex-US Moat Focus IndexSM (MGEUMFUN, or "International Moat Index"), modestly ouperformed the MSCI All Country World Index ex USA in June (0.35% versus 0.31%) and maintained its performance advantage for year-to-date period (18.48% vs. 14.10%).

    U.S. Domestic Moats: Value Realized in Healthcare

    A diverse set of companies contributed to the U.S. Moat Index's impressive month. As the largest sector in the U.S. Moat Index, healthcare was the top contributor. Led by Amgen, Inc. (AMGN US, +10.94%) and Gilead Sciences, Inc. (GILD US, +9.95%) the sector had strong performers from various sub-industries and all 16 constituents from the sector posted positive returns in June. State Street Corporation (STT US, +10.62%) was the standout from the financial sector as banks benefited from positive stress test results. Recreational vehicle producer Polaris Industries, Inc. (PII US, +10.32%) also boosted U.S. Moat Index returns in June. By contrast, several U.S. Moat Index constituents struggled during the month. Industrials companies Stericycle, Inc. (SRCL US, -6.67%), General Electric Co. (GE US, -6.22%), and C.H. Robinson Worldwide, Inc. (CHRW US, -2.03%) all detracted from performance. Starbucks (SBUX US, -8.33%) was the worst performing constituent in June as investors soured on the company.

    International Moats: Positives and Negatives Come to Stalemate

    ENN Energy Holdings Ltd. (2688 HK, +17.03%) was the standout constituent in the International Moat Index. The privately owned natural gas distribution company recovered following a May sell-off that Morningstar analysts believed was overdone following speculation of a potential China government imposed annual cap on natural gas distributor growth rates. Although ENN Energy Holdings Ltd. and China Resources Gas Group Ltd. (1193 HK, +9.81%) were the only two utilities firms in the International Moat Index, the sector was the top contributor to returns in a relatively flat month. Financials also performed well, but weak performance from consumer discretionary and telecommunication services companies kept the Index's total returns in check. Moat companies from Mexico posted impressive returns but their small weighting in the Index wasn't enough to overcome negative returns broadly from India, France, and China.

     

    (%) Month Ending 6/30/17

    Domestic Equity Markets

    International Equity Markets

    (%) As of 6/30/17

    Domestic Equity Markets

    International Equity Markets

    (%) Month Ending 6/30/17

    Morningstar
    Wide Moat Focus Index (MWMFTR)

    Top 5 Index Performers
    Constituent Ticker Total Return
    Amgen Inc. AMGN US 10.94
    State Street Corporation STT US 10.62
    Polaris Industries Inc. PII US 10.32
    Gilead Sciences, Inc. GILD US 9.95
    Biogen Inc. BIIB US 9.52

    Bottom 5 Index Performers
    Constituent Ticker Total Return
    salesforce.com, inc. CRM US -3.39
    General Electric Company GE US -6.22
    Stericycle, Inc. SRCL US -6.67
    Mondelez International, Inc. Class A MDLZ US -6.90
    Starbucks Corporation SBUX US -8.33

    View MOAT's current constituents

    Morningstar
    Global ex-US Moat Focus Index (MGEUMFUN)

    Top 5 Index Performers
    Constituent Ticker Total Return
    ENN Energy Holdings Limited 2688 HK 17.03
    Cemex SAB de CV Cert Part Ord Repr 2 ShsA & 1 ShsB CEMEXCPO MM 14.24
    IOOF Holdings Ltd IFL AU 11.57
    Ramsay Health Care Limited RHC AU 10.02
    CSL Limited CSL AU 10.00

    Bottom 5 Index Performers
    Constituent Ticker Total Return
    SFR Group SA NUM FP -6.57
    Orange SA ORA FP -7.53
    Genting Singapore Plc GENS SP -7.61
    Tata Motors Limited TTMT IN -9.34
    Baytex Energy Corp. BTE CN -16.64

    View MOTI's current constituents

    As of 6/16/17

    Morningstar
    Wide Moat Focus Index (MWMFTR)

    Index Additions
    Added Constituent Ticker
    L Brands Inc LB US
    T Rowe Price Group Inc TROW US
    CH Robinson Worldwide Inc CHRW US
    General Electric Co GE US
    BlackRock Inc BLK US
    John Wiley & Sons Inc. A JW/A US

    Index Deletions
    Deleted Constituent Ticker
    Mead Johnson Nutrition Co MJN US
    Jones Lang Lasalle Inc JLL US
    CBRE Group Inc. CBG US
    Mastercard Inc A MA US
    Varian Medical Systems Inc VAR US
    Cerner Corp CERN US

    View Latest MOAT Reconstitution Report
    View MOAT's list of current constituents

    Morningstar
    Global ex-US Moat Focus Index (MGEUMFUN)

    Index Additions
    Added Constituent Country
    Roche Hldgs AG Ptg Genus Switzerland
    Telefonica SA Spain
    Bayer Motoren Werke AG (BMW) Germany
    Potash Corp of Saskatchewan Canada
    China Resources Gas Group Ltd. China
    Canadian Imperial Bank of Commerce Canada
    Westpac Banking Corp Australia
    SFR Group France
    Mobile TeleSystems PJSC Russian Federation
    Wipro Ltd India
    Koninklijke Philips Electronics NV Netherlands
    Meggitt United Kingdom
    Novartis AG Reg Switzerland
    America Movil SAB de CV L Mexico
    Murata Manufacturing Co Ltd Japan
    DBS Group Holdings Singapore
    HeidelbergCement AG Germany
    Commonwealth Bank Australia Australia
    National Bank of Canada Canada
    Ansell Ltd Australia
    Julius Baer Group Switzerland

    Index Deletions
    Deleted Constituent Country
    Kao Corp Japan
    Seven & I Holdings Co Ltd Japan
    William Demant Hldg Denmark
    Telstra Corp Ltd Australia
    Carsales.com Ltd Australia
    DuluxGroup Ltd Australia
    Fisher & Paykel Healthcare Corporation Limited New Zealand
    Swire Properties Ltd Hong Kong
    Infosys Ltd India
    Tata Consultancy Services Ltd India
    Ramsay Health Care Ltd Australia
    Airbus SE France
    Singapore Exchange Ltd Singapore
    GEA Group AG Germany
    London Stock Exchange Plc United Kingdom
    Vicinity Centres Australia
    China Mobile Ltd. China
    Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. Mexico
    Iluka Resources Ltd Australia
    KDDI Corp Japan

    View Latest MOTI Reconstitution Report
    View MOTI's list of current constituents