VanEck ETF Launches two New Moat ETFs

VanEck ETF today lists two new moat ETFs on the London Stock Exchange and Deutsche Börse Xetra

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Martijn Rozemuller, CEO at VanEck Europe

• The new Morningstar US Wide Moat UCITS ETF and the VanEck Morningstar US SMID Moat UCITS ETF invest in US companies of different sizes with long-term competitive advantages
• With the two new ETFs, VanEck now offers investors four different investment products that pursue the so-called moat strategy

Asset manager VanEck is listing two new moat ETFs on the London Stock Exchange and Deutsche Börse Xetra today: With the VanEck Morningstar US Wide Moat UCITS ETF, investors can invest in shares of US companies that have a so-called economic moat, i.e. long-term and stable competitive advantages over their competitors. The VanEck Morningstar US SMID Moat UCITS ETF focuses on stocks of US small and mid-cap companies using the same approach.

Investments with moat strategy and Morningstar research

The strategy behind these funds is based on the concept of an “economic moat”, a term first coined by Warren Buffett, and aims to invest in companies that can protect themselves and their market share with a “moat” from competitors. Such moats are, for example, cost leadership, economies of scale, network effects, intangible assets, such as high brand awareness, or high switching costs for users, so that the market entry barriers for competitors are high.

The two new ETFs are based on the Morningstar® Wide Moat Focus IndexSM and the Morningstar US Small-Mid Cap Moat Focus IndexSM, which are derived from Morningstar research. Its team of analysts examines US companies in terms of their long-term economic competitive advantages over their competitors and their current fair value measurement. “The indices are based on the future-oriented analysis of the Morningstar Equity Research team,” explains Andrew Lane, Director of Equity Research at Morningstar. “Since its launch in February 2007, the Morningstar® Wide Moat Focus IndexSM has outperformed its benchmark, the Morningstar US Market Index, by 327 basis points annually. In each of the three years of market decline in 2008, 2018 and 2022, it held up better than the broad US equity market and also achieved outperformance in each subsequent recovery year.”

VanEck further expands its MOAT offering with new ETFs

“With its careful stock selection, the Morningstar® Wide Moat Focus IndexSM has historically outperformed the broad US equity market over longer periods of time”, says Martijn Rozemuller, CEO at VanEck Europe. “Our VanEck Morningstar US Wide Moat UCITS ETF is therefore a good fit as the core component of a US position in a portfolio, particularly for long-term investors. We believe that the outperformance will continue – but of course we can’t guarantee it.”

The new US Small and Mid-cap ETF is another building block in the range of moat investments: “In comparison to large-cap stocks, small and mid-cap stocks have historically often outperformed,” says Rozemuller. “Although such small and mid-cap stocks make up a considerable proportion of the US equity market, they are frequently underweighted in portfolios. The VanEck Morningstar US SMID Moat UCITS ETF can therefore be an excellent way for investors to diversify their portfolio more broadly. At the same time, they can benefit from the higher long-term yield potential and the more sustainable competitive advantages of the small-cap shares identified by Morningstar.”

With the two new ETFs as well as the VanEck Morningstar US Sustainable Wide Moat UCITS ETF and the globally investing VanEck Morningstar Global Wide Moat UCITS ETF, VanEck now offers four ETFs in Europe that invest using the moat strategy.

Source: ETFWorld