Launched on 04/24/2012, the VanEck Morningstar Wide Moat ETF (MOAT) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Van Eck, and has been able to amass over $15 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Blend. This particular fund seeks to match the performance of the Morningstar Wide Moat Focus Index before fees and expenses.
The Morningstar Wide Moat Focus Index tracks the overall performance of the 20 most attractively priced companies with sustainable competitive advantages.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.47%.
It has a 12-month trailing dividend yield of 1.38%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
For MOAT, it has heaviest allocation in the Healthcare sector --about 27.70% of the portfolio --while Industrials and Information Technology round out the top three.
When you look at individual holdings, Walt Disney Co/the (DIS) accounts for about 2.84% of the fund's total assets, followed by Bristol-Myers Squibb Co (BMY) and Boeing Co/the (BA).
The top 10 holdings account for about 26.51% of total assets under management.
Performance and Risk
The ETF has lost about -0.66% so far this year and was up about 11.43% in the last one year (as of 01/14/2025). In the past 52-week period, it has traded between $82.58 and $98.73.
The fund has a beta of 1.02 and standard deviation of 19.09% for the trailing three-year period, which makes MOAT a medium risk choice in this particular space. With about 53 holdings, it effectively diversifies company-specific risk.
Alternatives
VanEck Morningstar Wide Moat ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY) tracks S&P 500 Index. IShares Core S&P 500 ETF has $579.07 billion in assets, SPDR S&P 500 ETF has $617.61 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Blend.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Get it free >>VanEck Morningstar Wide Moat ETF (MOAT): ETF Research Reports
The Boeing Company (BA) : Free Stock Analysis Report
Bristol Myers Squibb Company (BMY) : Free Stock Analysis Report
The Walt Disney Company (DIS) : Free Stock Analysis Report
SPDR S&P 500 ETF (SPY): ETF Research Reports
iShares Core S&P 500 ETF (IVV): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
