U.S. Moats Outpace International Moats July showed contrasting results for the two Morningstar indices, although both were negatively impacted by the deepening weakness in the energy sector. For U.S. equities, the Morningstar® Wide Moat Focus IndexSM outperformed the S&P 500® Index (+2.27% versus +2.10%). By contrast, for international equities the Morningstar® Global ex-US Moat Focus IndexSM trailed the MSCI All Country World Index ex USA (-1.80% versus -0.28%).
Domestic Equity Markets: GOOGL and AMGN Shine
Tech giant Google (GOOGL) was the top performer for U.S.-centric Morningstar Wide Moat Focus Index (MWMFTR) posting total return performance of +21.75%. Biotech giant Amgen (AMGN) also performed notably well (+15.03%), and had its fair value estimate raised by Morningstar analysts in July. By contrast, several of the Index’s energy sector firms struggled in July, including Williams (WMB) and Spectra (SE), which declined 8.56% and 7.18%, respectively.
International Equity Markets: Energy Was Draining
Many of the constituent companies in the internationally-focused Morningstar Global ex-US Moat Focus Index (MGEUMFUN) were subjected to the broad sell-off in commodities last month, notably gold miner Eldorado Gold (EGO) and agribusiness company Potash (POT). Mexico, Hong Kong, and Canada all weighed down Index performance for the month. By contrast, several international moat-rated companies supported the Index, led by industrials and consumer staples companies.
The Difference is Morningstar
The new Moat Investor Monthly highlights key insights and performance trends impacting global moat investing. Internationally-focused MOTI joins U.S.-focused MOAT to provide investors with global exposure to Morningstar’s moat methodology and valuation principals.
MOAT
Market Vectors
Morningstar Wide Moat ETF
Index: Morningstar® Wide Moat Focus IndexSM (MWMFTR)
Focus: Domestic
MOTI
Market Vectors
Morningstar International Moat ETF
Index: Morningstar® Global ex-US Moat Focus IndexSM (MGEUMFUN)
Focus: International
Important Disclosure
This commentary is not intended as a recommendation to buy or to sell any of the named securities. For the Indices and the ETFs MOAT and MOTI holdings will vary.
Index performance is not representative of fund performance. To view fund performance current to the most recent month end, call 800.826.2333 or visit vaneck.com.
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. 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 and Morningstar® Global ex-US Moat Focus IndexSM were created and are maintained by Morningstar, Inc. Morningstar, Inc. does not sponsor, endorse, issue, sell, or promote the Market Vectors Morningstar Wide Moat ETF or Market Vectors Morningstar International Moat ETF and bears no liability with respect to the ETFs or any security. Morningstar® is a registered trademark of Morningstar, Inc. Morningstar Wide Moat Focus Index and Morningstar Global ex-US Moat Focus Index are service marks of Morningstar, Inc.
The Morningstar Wide Moat Focus Index consists of 20 U.S. companies identified as having sustainable, competitive advantages and whose stocks are the most attractively priced, according to Morningstar.
The Morningstar Global ex-US Moat Focus Index consists of 50 companies outside of the U.S. identified as having sustainable, competitive advantages and whose stocks are the most attractively priced, according to Morningstar.
The S&P 500 Index consists of 500 widely held common stocks covering the leading industries of the U.S. economy.
MSCI All Country World Index ex USA captures large and mid cap representation across 22 Developed Markets countries (excluding the U.S.) and 23 Emerging Markets countries.
An investment in the Market Vectors Morningstar Wide Moat ETF (MOAT) may be subject to risks which include, among others, fluctuations in value due to market and economic conditions or factors relating to specific issuers. Medium-capitalization companies may be subject to elevated risks. The Fund’s assets may be concentrated in a particular sector and may be subject to more risk than investments in a diverse group of sectors.
An investment in the Market Vectors Morningstar International Moat ETF (MOTI) may be subject to risks which include, among others, fluctuations in value due to market and economic conditions or factors relating to specific issuers. Foreign and emerging markets investments are subject to risks, which include changes in economic and political conditions, foreign currency fluctuations, changes in foreign regulations, changes in currency exchange rates, unstable governments, and limited trading capacity which may make these investments volatile in price or difficult to trade. Medium-capitalization companies may be subject to elevated risks. The Fund’s assets may be concentrated in a particular sector and may be subject to more risk than investments in a diverse group of sectors.
Fund shares are not individually redeemable and will be issued and redeemed at their Net Asset Value (NAV) only through certain authorized broker-dealers in large, specified blocks of shares called ”creation units” and otherwise can be bought and sold only through exchange trading. Creation units are issued and redeemed principally in kind. Shares may trade at a premium or discount to their NAV in the secondary market. You will incur brokerage expenses when trading Fund shares in the secondary market. Past performance is no guarantee of future results. Returns for actual Fund investments may differ from what is shown because of differences in timing, the amount invested, and fees and expenses.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 888.MKT.VCTR | 888.658.8287. Please read the prospectus and summary prospectus carefully before investing.
Van Eck Securities Corporation, Distributor
