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

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Making its debut on 04/24/2012, smart beta exchange traded fund VanEck Morningstar Wide Moat ETF (MOAT - Free Report) provides investors 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.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

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.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

The fund is managed by Van Eck, and has been able to amass over $7.42 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Blend. MOAT 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

Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.

Operating expenses on an annual basis are 0.46% for this ETF, which makes it on par with most peer products in the space.

The fund has a 12-month trailing dividend yield of 1.09%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

For MOAT, it has heaviest allocation in the Information Technology sector --about 26.90% of the portfolio --while Industrials and Healthcare round out the top three.

Looking at individual holdings, Kellogg Co (K - Free Report) accounts for about 2.92% of total assets, followed by Veeva Systems Inc (VEEV - Free Report) and Polaris Inc (PII - Free Report) .

MOAT's top 10 holdings account for about 26.83% of its total assets under management.

Performance and Risk

So far this year, MOAT return is roughly 14.33%, and was up about 1.56% in the last one year (as of 02/09/2023). During this past 52-week period, the fund has traded between $58.77 and $76.48.

MOAT has a beta of 1.03 and standard deviation of 26.16% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 51 holdings, it effectively diversifies company-specific risk.


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 $310.66 billion in assets, SPDR S&P 500 ETF has $382.19 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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