US Equity: wide moat investing

Combining quality and value for a history of outperformance

Morningstar® equity research aims to identify attractively priced companies that have wide ‘economic moats™’, being structural and sustainable competitive advantages that ensure consistent earnings for 20+ years.

Australian investors can leverage off Morningstar’s findings by investing in a portfolio of wide moat companies in a single trade on ASX through the VanEck Vectors Morningstar Wide Moat ETF under trading code ‘MOAT’.

MOAT is a high conviction US equity portfolio of at least 40 attractively priced wide moat companies as determined by Morningstar.

Fund Details
ASX Ticker MOAT
Exposure US Equity
Index Provider Morningstar
Distribution Frequency Annually
Number of Holdings At least 40

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Identifying quality and value

Quality: five sources of moat



Evaluating economic moats is a qualitative process. Morningstar classify moats as either wide, narrow or none.

The hurdle is high for earning a wide moat rating. Despite scouring the universe of 1,500 listed US companies, Morningstar have only assigned wide moat ratings to approximately 150 companies. But Morningstar does not stop there.


Value: fair value estimate

  • Morningstar's analyst team assigns a fair value to each company in its coverage universe
    • Fair value is a per-share measure of what a business is worth; intrinsic value
    • Fair value is not a target price which investors might pay for shares
  • Three stage discounted cash flow model is used to determine fair value estimate of a company
  • Over time, a company’s stock may trade above or below Morningstar’s fair value estimate
    • This may create potential opportunities to invest in a company at a discount to fair value

A history of outperformance

VanEck Vectors Morningstar Wide Moat ETF (MOAT) seeks to track the Morningstar Wide Moat Focus Index. The MOAT Index’s approach to investing in US companies with wide economic moats when they are attractively priced has resulted in long-term outperformance versus the broad US equity market.


Source: Morningstar; FactSet.
Inception date of index is 17 October 2007


Beating the benchmark: impressive Batting Average

Moat investing is a long-term strategy and is not intended for tactical allocations. Compared to the S&P 500 Index, the MOAT Index has outperformed more frequently through longer holding periods.


Source: Morningstar; FactSet.

Batting Average is measured by dividing the number of periods a portfolio or investment strategy outperforms a benchmark by the total number of periods.


Find out more about wide moat investing

Investors - 02 8038 3300

Registrar - 1300 68 3837

Email - info@vaneck.com.au

Adviser Services - click here

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IMPORTANT NOTICE:

Issued by VanEck Investments Limited ABN 22 146 596 116 AFSL 416755 (‘VanEck’). VanEck is a wholly owned subsidiary of Van Eck Associates Corporation based in New York, United States. VanEck Vectors ETF Trust ARBN 604 339 808 (the ‘Trust’) is the issuer of shares in the VanEck Vectors Morningstar Wide Moat ETF (‘US Fund’). The Trust and the US Fund are regulated by US laws which differ from Australian laws. Trading in the US Fund’s shares on ASX will be settled by CHESS Depositary Interests (‘CDIs’) which are also issued by the Trust. The Trust is organised in the State of Delaware, US. Liability of investors is limited. VanEck Associates serves as the investment adviser to the US Fund. VanEck, on behalf of the Trust, is the authorised intermediary for the offering of CDIs over the US Fund’s shares and issuer in respect of the CDIs and corresponding Fund’s shares traded on ASX.
This is general information only and not financial advice. It does not take into account any person’s individual objectives, financial situation or needs. Investing in international markets has specific risks that are in addition to the typical risks associated with investing in the Australian market. These include currency/foreign exchange fluctuations, ASX trading time differences and changes in foreign regulatory and tax regulations. Before making an investment decision in relation to the US Fund you should read the PDS and with the assistance of a financial adviser consider if it is appropriate for your circumstances. The PDS is available at www.vaneck.com.au or by calling 1300 68 38 37.
Investment in the US Fund may be subject to risks that include, among others, fluctuations in value due to market and economic conditions or factors relating to specific issuers. Medium capitalisation companies may be subject to elevated risks. The US Fund’s assets may be concentrated in a particular sector and may be subject to more risk than investments in a diverse group of sectors.

Past performance is not a reliable indicator of future performance. No member of the VanEck group of companies or the Trust gives any guarantee or assurance as to the repayment of capital, the payment of income, the performance or any particular rate of return from the US Fund.

The Morningstar® Wide Moat Focus Index™ was created and is maintained by Morningstar, Inc. Morningstar, Inc. does not sponsor, endorse, issue, sell, or promote the US Fund and bears no liability with respect to the US Fund or any security. Morningstar® and Morningstar Wide Moat Focus Index™ are trademarks of Morningstar, Inc. and have been licensed for use by VanEck.