A Wide Moat Focus Provides Differentiation
03 March 2025
Read Time 2 MIN
With the proliferation of mega-cap exposure across investor portfolios, the Morningstar Wide Moat Focus Index (the “Moat Index”) provides important diversification relative to major U.S. equity indexes. This differentiation is driven by its focus on high quality, attractively valued companies and its equally weighted approach.
The Moat Index philosophy has provided attractive exposures while also providing compelling long-term results that have come without doubling down on the largest companies by market cap, such as the “Magnificent 7”. Over the long-term, the combination of strong performance and diversification benefits has made the strategy appealing to many.
This Morningstar report highlights how common wide moat-rated companies are within popular U.S. large cap equity indexes and examines the Moat Index’s appeal as a complement to broad market exposure. The Moat Index’s focus on attractive valuations is what can give this systematic strategy its contrarian bias, by leading it to out-of-favor moat stocks trading well below their intrinsic value. The strategy has long offered diversification benefits while historically providing a compelling risk/reward profile, in spite of its lack of exposure to mega cap tech and other leading exposures in the S&P 500 Index.
Wide Moat Focus Provides Differentiation
Access this strategy with the VanEck Morningstar Wide Moat ETF (MOAT) and VanEck Morningstar Wide Moat Fund, which seek to replicate as closely as possible, before fees and expenses, the price and yield performance of the Morningstar Wide Moat Focus Index.
Source for all data unless otherwise noted: Morningstar.
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All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future results.
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