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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?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

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.

The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.

Fund Sponsor & Index

MOAT is managed by Van Eck, and this fund has amassed over $14.74 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

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 0.47%, which makes it on par with most peer products in the space.

MOAT's 12-month trailing dividend yield is 0.84%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

For MOAT, it has heaviest allocation in the Healthcare sector --about 19.20% of the portfolio --while Financials and Industrials round out the top three.

Looking at individual holdings, Salesforce.com Inc (CRM - Free Report) accounts for about 2.96% of total assets, followed by Wells Fargo & Co (WFC - Free Report) and Equifax Inc (EFX - Free Report) .

The top 10 holdings account for about 27.89% of total assets under management.

Performance and Risk

So far this year, MOAT has gained about 2.78%, and was up about 19.61% in the last one year (as of 05/09/2024). During this past 52-week period, the fund has traded between $70.71 and $89.90.

MOAT has a beta of 1.04 and standard deviation of 19.06% 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 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 $451.12 billion in assets, SPDR S&P 500 ETF has $511.31 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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