Morningstar’s $12.9 Billion ETF Ripped 340%

Core Insights - The VanEck MOAT ETF focuses on companies with sustainable competitive advantages, utilizing Morningstar's research to identify firms with pricing power and other structural defenses [2][3] Fund Overview - MOAT tracks the Morningstar Wide Moat Focus Index, holding approximately 50 US companies believed to have durable competitive advantages and trading below fair value, with a quarterly rebalancing and a turnover rate of 55% [3] - The fund has $12.9 billion in assets, providing tight spreads and reliable liquidity [3] Sector Allocation - The portfolio is heavily weighted in Industrials (23.9%), Information Technology (21.9%), and Healthcare (18.8%), with no exposure to Energy, Materials, or Utilities [4] - Top holdings include Huntington Ingalls Industries, UPS, Estée Lauder, and Airbnb, with the largest position being just under 3% of the fund [4] Performance Metrics - Over the past decade, MOAT has returned 340%, outperforming the S&P 500's 261%, although the performance gap narrows in shorter time frames [5][9] - In the last year, MOAT gained 16.8% compared to 16.9% for SPY, and over five years, it returned 77% against SPY's 83% [5][9] Fee Structure - MOAT charges a management fee of 0.47%, which is higher than a total market fund like VTI, impacting long-term returns, especially during periods of underperformance [6][9] Concentration Risks - The fund's sector concentration, with nearly two-thirds of assets in Industrials, Tech, and Healthcare, can lead to significant benefits when these sectors perform well but limits diversification during downturns [7] - The absence of Energy and Materials means MOAT lacks direct commodity exposure, which could be a disadvantage during inflationary periods [7] Subjectivity in Ratings - Morningstar's moat ratings are subjective, and analysts' assessments of competitive durability may not always be accurate, with quarterly rebalancing relying on their ongoing judgments [8]