MOTI ETF: Question & Answer
February 01, 2024
Read Time 3 MIN
Leveraging Morningstar’s forward-looking, rigorous equity research process, VanEck Morningstar International Moat ETF (MOTI) provides a focus on international companies that possess sustainable competitive advantages (“moats”). This blog is intended to address frequently asked questions about investing in international stocks, Morningstar’s forward-looking research and MOTI.
- Why should investors consider investing in international stocks?
- What is the benefit of leveraging Morningstar’s equity research team in international markets?
- Why does the International Moat Index include narrow moat rated companies in addition to wide moat companies?
- How frequently does the International Moat Index rebalance?
- How does MOTI’s geographic exposure vary from broad market indexes?
- How can MOTI fit within a portfolio?
- How can investors buy VanEck ETFs?
Why should investors consider investing in international stocks?
International companies allow investors to access the potential for growth in foreign economies, including emerging markets. Because of U.S. investors’ home country investing bias, foreign stocks are often considered risky, but they may also come with promising growth potential. Furthermore, international companies have historically performed well, as the dollar weakens. A well-diversified portfolio including both domestic and foreign equity exposure can allow investors to participate broadly through market cycles and diversify single country and/or regional risks.
What is the benefit of leveraging Morningstar’s equity research team in international markets?
Investing in foreign markets can be intimidating. Many investors do not have access to company data or a full grasp of the geopolitical risks present in each market.
MOTI seeks to track the Morningstar® Global Markets ex-US Moat Focus IndexSM (“International Moat Index”), which is intended to track the overall performance of attractively priced companies outside of the U.S. with sustainable competitive advantages and attractive valuations. The Index is fueled by Morningstar’s forward-looking, rigorous equity research process driven by over 100 analysts globally.
Morningstar has analysts on the ground in major markets globally, and they all apply Morningstar’s singular, consistent economic moat rating process to each company they cover. This informed view on markets and companies allows MOTI investors to invest internationally with confidence.
Why does the International Moat Index include narrow moat rated companies in addition to wide moat companies?
Unlike Morningstar’s flagship Wide Moat Focus Index, the International Moat Index includes narrow moat rated companies in addition to wide moat rated companies. Both ratings, narrow and wide, signify strong competitive advantages. The key difference is driven by the conviction each Morningstar analyst has in a company’s ability to maintain that advantage. Wide moat rated companies are often expected to maintain their advantage for 20 or more years into the future. For narrow moat rated companies, the time horizon is up to 10 years into the future.
Including narrow moat rated companies, of which there are more, allows the index to better take advantage of valuation opportunities in the international markets and offers greater diversification and exposure to various markets.
Visit the fund page for the fact sheet, holdings, performance and more.
How frequently does the International Moat Index rebalance?
The Index employs a staggered rebalance methodology whereby the Index is divided into two equally-weighted sub-portfolios, and each is reconstituted and rebalanced semi-annually on alternating quarters. Adjustments to one sub-portfolio are performed on the third Friday of March and September, and adjustments for the other sub-portfolio are performed on the third Friday of June and December. Due to the staggered rebalance methodology, Index constituents and weights may vary between sub-portfolios.
How does MOTI’s geographic exposure vary from broad market indexes?
In order to qualify for the International Moat Index, a company must be covered by a Morningstar analyst. Therefore, Morningstar’s coverage profile can dictate exposures. For example, their coverage of Japanese equities is smaller than Japan’s representation in a typical broad international market index. Because of this, there is often a structural underweight to Japan.
Conversely, Morningstar has robust coverage of Australian companies and many of them find their way into the International Moat Index. Monthly portfolio exposures are available on VanEck’s website.
How can MOTI fit within a portfolio?
MOTI offers investors a diversified portfolio of international equities that can serve as a core portfolio building block. International investing allows for investors to distribute investment risk between markets and global companies. Investors should consider MOTI for long-term exposure as it targets companies with sustainable competitive advantages and attractive valuations.
How can investors buy VanEck ETFs?
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DISCLOSURES
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities/financial instruments mentioned herein. 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. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its employees.
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.
The Fund may become "non-diversified" as defined under the Investment Company Act of 1940, as amended, solely as a result of a change in relative market capitalization or index weighting of one or more constituents of the Morningstar® Global Markets ex-US Moat Focus IndexSM. This means that the Fund may invest a greater percentage of its assets in a limited number of issuers than would be the case if the Fund were always managed as a diversified management investment company. The Fund intends to be diversified in approximately the same proportion as the Morningstar® Global Markets ex-US Moat Focus IndexSM. Shareholder approval will not be sought when the Fund crosses from diversified to non-diversified status due solely to a change in the relative market capitalization or index weighting of one or more constituents of the Morningstar® Global Markets ex-US Moat Focus IndexSM.
The Morningstar® Global Markets ex-US Moat Focus IndexSM was created and is maintained by Morningstar, Inc. Morningstar, Inc. does not sponsor, endorse, issue, sell, or promote the VanEck Morningstar International Moat ETF and bears no liability with respect to that ETF or any security. Morningstar® is a registered trademark of Morningstar, Inc. Morningstar® Global Markets ex-US Moat Focus IndexSM is a service mark of Morningstar, Inc.
An investment in the Fund may be subject to risks which include, among others, risks related to investing in equity securities, communication services sector, consumer discretionary sector, financials sector, information technology sector, health care sector, medium-capitalization companies, foreign securities, foreign currency, emerging market issuers, special risk considerations of investing in Asian, Chinese, European and United Kingdom issuers, depositary receipts, cash transactions, market, operational, high portfolio turnover, 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 index-related concentration risks, all of which may adversely affect the Fund. Emerging market issuers and foreign securities may be subject to securities markets, political and economic, investment and repatriation restrictions, different rules and regulations, less publicly available financial information, foreign currency and exchange rates, operational and settlement, and corporate and securities laws risks. 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.
©️ Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.
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DISCLOSURES
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities/financial instruments mentioned herein. 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. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its employees.
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.
The Fund may become "non-diversified" as defined under the Investment Company Act of 1940, as amended, solely as a result of a change in relative market capitalization or index weighting of one or more constituents of the Morningstar® Global Markets ex-US Moat Focus IndexSM. This means that the Fund may invest a greater percentage of its assets in a limited number of issuers than would be the case if the Fund were always managed as a diversified management investment company. The Fund intends to be diversified in approximately the same proportion as the Morningstar® Global Markets ex-US Moat Focus IndexSM. Shareholder approval will not be sought when the Fund crosses from diversified to non-diversified status due solely to a change in the relative market capitalization or index weighting of one or more constituents of the Morningstar® Global Markets ex-US Moat Focus IndexSM.
The Morningstar® Global Markets ex-US Moat Focus IndexSM was created and is maintained by Morningstar, Inc. Morningstar, Inc. does not sponsor, endorse, issue, sell, or promote the VanEck Morningstar International Moat ETF and bears no liability with respect to that ETF or any security. Morningstar® is a registered trademark of Morningstar, Inc. Morningstar® Global Markets ex-US Moat Focus IndexSM is a service mark of Morningstar, Inc.
An investment in the Fund may be subject to risks which include, among others, risks related to investing in equity securities, communication services sector, consumer discretionary sector, financials sector, information technology sector, health care sector, medium-capitalization companies, foreign securities, foreign currency, emerging market issuers, special risk considerations of investing in Asian, Chinese, European and United Kingdom issuers, depositary receipts, cash transactions, market, operational, high portfolio turnover, 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 index-related concentration risks, all of which may adversely affect the Fund. Emerging market issuers and foreign securities may be subject to securities markets, political and economic, investment and repatriation restrictions, different rules and regulations, less publicly available financial information, foreign currency and exchange rates, operational and settlement, and corporate and securities laws risks. 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.
©️ Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.