New York investment manager Van Eck Global listed its Market Vectors Morningstar Wide Moat exchange-traded fund (ETF) (ASX code: MOAT), giving Australian investors exposure to a concentrated portfolio of U.S. equities with a new twist. This ETF seeks to leverage Morningstar, Inc. (‘Morningstar’)’s equity research that aims to identify companies with wide “economic moats” or the potential to maintain a competitive advantage over the long term.
The concept of economic moats was popularised by investment legend Warren Buffett. To Buffett, the castle is the business and the moat is its competitive advantage. The wider the moat, the more sustainable the business.
MOAT tracks the Morningstar® Wide Moat Focus IndexSM, which comprises the 20 most undervalued U.S. ‘wide moat’ companies as selected by Morningstar equity analysts. Morningstar constructs a high conviction portfolio of only 20 wide moat companies with the lowest market price to fair value ratios and equally weights them. Morningstar reconstitutes and rebalances the index quarterly. To be included in the Index, a company must trade on a U.S. stock exchange, have a market capitalisation of at least US$100 million, and meet certain liquidity requirements. The Morningstar Wide Moat Focus Index has outperformed the S&P 500 Index since its February 2007 inception and returned 19.69% per annum over the three years to 31 May 2015.
Arian Neiron, Managing Director, Van Eck Global Australia, said: “MOAT provides Australian investors and SMSF trustees with a highly attractive investment proposition. With one trade, they can diversify their portfolios by investing in leading U.S. companies such as Google, Berkshire Hathaway, American Express and Merck, selected according to Morningstar equity analysts. The launch of MOAT further extends Van Eck Global’s commitment to offering Australian investors innovative investment opportunities that cater to a variety of needs.”
| Fund | ASX code | Features | Management Cost |
| Market Vectors Morningstar Wide Moat ETF |
MOAT | MOAT aims to provide investment returns before fees and expenses that replicate the performance of the Morningstar Wide Moat Focus Index. • Combines both Morningstar’s wide moat ratings (quality) and fair value estimates (value) to create the Index, which tracks the performance of the 20 most attractively priced US companies with sustainable competitive advantages • Stocks are selected from about 140 US stocks classified as Wide Moat; these are chosen from Morningstar’s US Market Index, which is a broad market index representing 97% of U.S. equity market capitalisation and about 1500 stocks • Morningstar’s moat ratings identify competitive advantages 0.49% p.a. 2 and estimate how long a company can sustain those advantages • All the benefits of ETFs including: o Simple trading on the ASX o Liquid o Transparent daily holdings o Cost effectiveness • Top 5 companies by weighting (at 31/5/15): Gilead Sciences (5.46%); Schlumberger (5.37%); Core Laboratories (5.27%); Williams Companies (5.32%); and Emerson Electric (5.23%). • Sector breakdown (at 31/5/15): Energy (30.2%); Health Care (25.5%); Consumer Discretionary (18.5%); Industrials (15.4%); Information Technology (5.2%); Consumer Staples (5.1%). |
0.49% p.a. |
Source: Van Eck Global
