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MOAT: 10 Years of Focusing on Valuation

May 11, 2022

Read Time 4 MIN

The focus on valuation by the Morningstar equity research team has been a central theme for the VanEck Morningstar Wide Moat ETF (MOAT) since its launch 10 years ago.

April marked the 10-year anniversary of the listing of VanEck Morningstar Wide Moat ETF (MOAT). Over the last decade, the ETF has had much success from both a performance and asset gathering perspective. The ETF finished the month of April with just under $7B in assets under management and received a five star overall rating from Morningstar. It ranked in the top quartile of its peers for the 3, 5, and 10 year periods as of April 30, 2022. Notably, MOAT was the 13th best performing fund over the last 10 years out of 808 active and passive ETFs and mutual funds in the Morningstar US Fund Large Blend Category.

MOAT Morningstar Rating as of 4/30/2022
Category Overall 3 Year 5 Year 10 Year
Large Blend ★★★★★ ★★★★ ★★★★ ★★★★★
  5 stars of 1212 funds 4 stars of 1212 funds 4 stars of 1104 funds 5 stars of 808 funds

Source: Morningstar. Past performance is no guarantee of future results. See important definitions and disclosures below.

MOAT Morningstar Category Rankings as of 4/30/2022
Morningstar US Fund Large Blend Category
YTD 1 Year 3 Year 5 Year 10 Year
Percentile
Rank
Absolute
Rank
Percentile
Rank
Absolute
Rank
Percentile
Rank
Absolute
Rank
Percentile
Rank
Absolute
Rank
Percentile
Rank
Absolute
Rank
13 152 73 950 23 230 9 87 3 13
Funds Ranked Funds Ranked Funds Ranked Funds Ranked Funds Ranked
1402 1348 1212 1104 808

Source: Morningstar. Past performance is no guarantee of future results.

Moat Index Reaches 15 Years

MOAT seeks to track the Morningstar® Wide Moat Focus IndexSM (the “Moat Index” or “Index”), which systematically represents some of Morningstar equity research’s top U.S. stock picks based on their forward-looking assessment of a company’s competitive advantage (i.e., “moat”) and fair value estimate. The Moat Index features an equally impressive track record with over 15 years of live results. Since launching in early 2007, shortly before the global financial crisis struck, the Index has provided real-time performance through many market environments, both challenging and prosperous.

Through it all, the forward-looking process of Morningstar’s equity research team has driven the Index’s impressive performance. Each of the features of the Index’s methodology (wide moat rated, attractively priced companies, equally weighted) has added to the funds excess returns historically.

Each Moat Index Feature Has Incrementally Improved Performance

2/14/2007 – 4/30/2022

Each Moat Index Feature Has Incrementally Improved Performance

Source: Morningstar. Data represents index total return.

Index performance is not illustrative of Fund performance. Fund performance current to the most recent month end is available by visiting vaneck.com or by calling 800.826.2333. Past performance is no guarantee of future results. Indexes are unmanaged and are not securities in which an investment can be made.

Moat Index’s Focus on Valuation Offers Upside Potential and Downside Buffer

The Moat Index consistently adjusts its exposure to target attractively priced companies among its eligible U.S. wide moat universe. This helps to prevent drastically overpaying for U.S. equity exposure and has contributed to the Index’s defensive posture in periods of market turmoil, such as what we are all experiencing in 2022. It also allows the Index to target attractive entry points when the market is oversold, offering potentially more upside in recoveries if the market begins to price in the true fair value of those oversold stocks.

Weighted Average Price to Fair Value: Moat Index vs. S and P 500

Weighted Average Price to Fair Value: Moat Index vs. S and P 500

Source: Morningstar. Index performance is not illustrative of Fund performance. Fund performance current to the most recent month end is available by visiting vaneck.com or by calling 800.826.2333. Past performance is no guarantee of future results. Indexes are unmanaged and are not securities in which an investment can be made.

Average Annual Returns as of 3/31/2022
  1 Year 5 Year Since Inception
(4/24/2012)
MOAT (NAV) 9.01 16.27 15.55
MOAT (Price) 8.99 16.30 15.56
Moat Index 9.67 16.84 16.12
S&P 500 Index 15.65 15.99 15.03

Source: VanEck, Morningstar. MOAT expenses: Gross 0.46% and Net 0.46%. Expenses are capped contractually at 0.49% until February 1, 2023. Cap excludes acquired fund fees and expenses, interest expense, trading expenses, taxes and extraordinary expenses.

The performance data quoted represents past performance. Past performance is not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance may be lower or higher than performance data quoted. Please call 800.826.2333 or visit vaneck.com for performance current to the most recent month ended.

The "Net Asset Value" (NAV) of a Fund is determined at the close of each business day, and represents the dollar value of one share of the fund; it is calculated by taking the total assets of the fund, subtracting total liabilities, and dividing by the total number of shares outstanding. The NAV is not necessarily the same as the ETF 's intraday trading value. Investors should not expect to buy or sell shares at NAV.

Effective June 20, 2016, Morningstar implemented several changes to the Morningstar Wide Moat Focus Index construction rules. Among other changes, the index increased its constituent count from 20 stocks to at least 40 stocks and modified its rebalance and reconstitution methodology. These changes may result in more diversified exposure, lower turnover, and longer holding periods for index constituents than under the rules in effect prior to this date. Past performance is no guarantee of future results.

We look forward to the decades ahead and, if you have not already signed up, we encourage you to receive more Moat Investing insights, via our subscription center.

Important Disclosures

Source for all data unless otherwise noted: Morningstar.

Morningstar Ratings: When applicable, ratings shown when the ETF is rated three stars or more for any given period. For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.)The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics.

The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. The information herein represents the opinion of the author(s), but not necessarily those of VanEck.

This commentary is not intended as a recommendation to buy or to sell any of the sectors or securities mentioned herein. Holdings will vary for the MOAT ETF and its corresponding Index. For a complete list of holdings in the ETF, please click here: https://www.vaneck.com/etf/equity/moat/holdings/.

An investor cannot invest directly in an index. Returns reflect past performance and do not guarantee future results. Results reflect the reinvestment of dividends and capital gains, if any. Certain indices may take into account withholding taxes. Index returns do not represent Fund returns. The Index does not charge management fees or brokerage expenses, nor does the Index lend securities, and no revenues from securities lending were added to the performance shown.

Fair value estimate: the Morningstar analyst's estimate of what a stock is worth. Price/Fair Value: ratio of a stock's trading price to its fair value estimate.

The Morningstar® Wide Moat Focus IndexSM was created and is maintained by Morningstar, Inc. Morningstar, Inc. does not sponsor, endorse, issue, sell, or promote the VanEck Morningstar Wide Moat ETF and bears no liability with respect to that ETF or any security. Morningstar® is a registered trademark of Morningstar, Inc. Morningstar® Wide Moat Focus IndexSM is a service mark of Morningstar, Inc.

The Morningstar® Wide Moat Focus IndexSM consists of U.S. companies identified as having sustainable, competitive advantages and whose stocks are attractively priced, according to Morningstar.

The S&P 500® Index consists of 500 widely held common stocks covering industrial, utility, financial and transportation sector; as an Index, it is unmanaged and is not a security in which investments can be made.

The S&P 500® Index is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Van Eck Associates Corporation. Copyright © 2021 S&P Dow Jones Indices LLC, a division of S&P Global, Inc., and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC’s indices please visit www.spdji.com. S&P® is a registered trademark of S&P Global and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. Neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors shall have any liability for any errors, omissions, or interruptions of any index or the data included therein.

An investment in the VanEck Morningstar Wide Moat ETF (MOAT® ) may be subject to risks which include, among others, investing in equity securities, consumer discretionary, consumer staples, health care, industrials and information technology sectors, medium-capitalization companies, market, operational, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversification and concentration risks, which may make these investments volatile in price or difficult to trade. Medium-capitalization companies may be subject to elevated risks.

Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider a Fund's investment objective, risks, charges and expenses carefully before investing. To obtain a prospectus and summary prospectus for VanEck Funds and VanEck ETFs, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus for VanEck Funds and VanEck ETFs carefully before investing.

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