Investment Education

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

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

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

The fund is managed by Van Eck. MOAT has been able to amass assets over $16.12 billion, making it one of the largest ETFs in the Style Box - Large Cap Blend. MOAT, before fees and expenses, 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

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.47%.

It has a 12-month trailing dividend yield of 0.75%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Representing 23.90% of the portfolio, the fund has heaviest allocation to the Industrials sector; Healthcare and Information Technology round out the top three.

When you look at individual holdings, Transunion (TRU) accounts for about 2.81% of the fund's total assets, followed by Bristol-Myers Squibb Co (BMY) and Gilead Sciences Inc (GILD).