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

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Designed to provide broad exposure to the Style Box - Large Cap Blend category of the market, the VanEck Morningstar Wide Moat ETF (MOAT - Free Report) is a smart beta exchange traded fund launched on 04/24/2012.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the 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.

On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix 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

MOAT is managed by Van Eck, and this fund has amassed over $7.61 billion, which makes 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.

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

It's 12-month trailing dividend yield comes in at 1.11%.

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.

This ETF has heaviest allocation in the Information Technology sector - about 26.90% of the portfolio. Industrials and Healthcare round out the top three.

When you look at individual holdings, Kellogg Co (K - Free Report) accounts for about 2.92% of the fund's 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 has added roughly 12.68%, and was up about 1.11% in the last one year (as of 04/12/2023). During this past 52-week period, the fund has traded between $58.77 and $76.13.

MOAT has a beta of 1.02 and standard deviation of 21.10% 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.

Alternatives

VanEck Morningstar Wide Moat ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.

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 $305.79 billion in assets, SPDR S&P 500 ETF has $371.48 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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