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Is VanEck Morningstar SMID Moat ETF (SMOT) a Strong ETF Right Now?
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A smart beta exchange traded fund, the VanEck Morningstar SMID Moat ETF (SMOT - Free Report) debuted on 10/04/2022, and offers broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Because the fund has amassed over $391.49 million, this makes it one of the average sized ETFs in the Style Box - All Cap Blend. SMOT is managed by Van Eck. This particular fund, before fees and expenses, seeks to match the performance of the MORNINGSTAR US SML-MID CAP MOAT FOCUS ID.
The Morningstar US Small-Mid Cap Moat Focus Index tracks the overall performance of small and mid-cap companies with sustainable competitive advantages and attractive valuations.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.49%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.56%.
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.
Representing 22.50% of the portfolio, the fund has heaviest allocation to the Consumer Discretionary sector; Industrials and Financials round out the top three.
Taking into account individual holdings, Scotts Miracle-Gro Co/the (SMG - Free Report) accounts for about 1.73% of the fund's total assets, followed by Lithia Motors Inc (LAD - Free Report) and Norwegian Cruise Line Holdings Ltd (NCLH - Free Report) .
Its top 10 holdings account for approximately 15.91% of SMOT's total assets under management.
Performance and Risk
So far this year, SMOT has added roughly 15.52%, and was up about 19.71% in the last one year (as of 12/16/2024). During this past 52-week period, the fund has traded between $30.23 and $37.49.
The ETF has a beta of 1.26 and standard deviation of 17.60% for the trailing three-year period. With about 107 holdings, it effectively diversifies company-specific risk.
Alternatives
VanEck Morningstar SMID Moat ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P Total U.S. Stock Market ETF (ITOT - Free Report) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI - Free Report) tracks CRSP US Total Market Index. IShares Core S&P Total U.S. Stock Market ETF has $66.32 billion in assets, Vanguard Total Stock Market ETF has $468.54 billion. ITOT has an expense ratio of 0.03% and VTI charges 0.03%.
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 - All 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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Is VanEck Morningstar SMID Moat ETF (SMOT) a Strong ETF Right Now?
A smart beta exchange traded fund, the VanEck Morningstar SMID Moat ETF (SMOT - Free Report) debuted on 10/04/2022, and offers broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Because the fund has amassed over $391.49 million, this makes it one of the average sized ETFs in the Style Box - All Cap Blend. SMOT is managed by Van Eck. This particular fund, before fees and expenses, seeks to match the performance of the MORNINGSTAR US SML-MID CAP MOAT FOCUS ID.
The Morningstar US Small-Mid Cap Moat Focus Index tracks the overall performance of small and mid-cap companies with sustainable competitive advantages and attractive valuations.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.49%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.56%.
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.
Representing 22.50% of the portfolio, the fund has heaviest allocation to the Consumer Discretionary sector; Industrials and Financials round out the top three.
Taking into account individual holdings, Scotts Miracle-Gro Co/the (SMG - Free Report) accounts for about 1.73% of the fund's total assets, followed by Lithia Motors Inc (LAD - Free Report) and Norwegian Cruise Line Holdings Ltd (NCLH - Free Report) .
Its top 10 holdings account for approximately 15.91% of SMOT's total assets under management.
Performance and Risk
So far this year, SMOT has added roughly 15.52%, and was up about 19.71% in the last one year (as of 12/16/2024). During this past 52-week period, the fund has traded between $30.23 and $37.49.
The ETF has a beta of 1.26 and standard deviation of 17.60% for the trailing three-year period. With about 107 holdings, it effectively diversifies company-specific risk.
Alternatives
VanEck Morningstar SMID Moat ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P Total U.S. Stock Market ETF (ITOT - Free Report) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI - Free Report) tracks CRSP US Total Market Index. IShares Core S&P Total U.S. Stock Market ETF has $66.32 billion in assets, Vanguard Total Stock Market ETF has $468.54 billion. ITOT has an expense ratio of 0.03% and VTI charges 0.03%.
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 - All 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.