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Is VanEck Morningstar Wide Moat ETF (MOAT) a Strong ETF Right Now?

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The VanEck Morningstar Wide Moat ETF (MOAT - Free Report) made its debut on 04/24/2012, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Blend category of the market.

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

The fund is sponsored by Van Eck. It has amassed assets over $6.90 billion, making it one of the largest ETFs in the Style Box - Large Cap Blend. Before fees and expenses, MOAT seeks to match the performance of the Morningstar Wide Moat Focus Index.

The Morningstar Wide Moat Focus Index tracks the overall performance of the 20 most attractively priced companies with sustainable competitive advantages.

Cost & Other Expenses

For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.

Annual operating expenses for MOAT are 0.46%, which makes it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.17%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Representing 24.80% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Healthcare and Consumer Staples round out the top three.

Looking at individual holdings, Cheniere Energy Inc (LNG - Free Report) accounts for about 3.62% of total assets, followed by Lockheed Martin Corp (LMT - Free Report) and Berkshire Hathaway Inc (BRK/B).

The top 10 holdings account for about 29.94% of total assets under management.

Performance and Risk

The ETF has lost about -8.48% so far this year and is down about -3.44% in the last one year (as of 06/03/2022). In the past 52-week period, it has traded between $65.37 and $78.14.

The ETF has a beta of 1.01 and standard deviation of 23.26% for the trailing three-year period, making it a medium risk choice in the space. With about 48 holdings, it has more concentrated exposure than peers.


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 - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $304.86 billion in assets, SPDR S&P 500 ETF has $382.36 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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