March was another strong month for global moat-rated companies. Although the U.S.-oriented Morningstar® Wide Moat Focus IndexSM (MWMFTR) slightly underperformed the S&P 500® Index (6.44% vs. 6.78%) for the month, it maintained its strong outperformance for the first three months of the year (6.51% vs. 1.35%). For international moats, Morningstar® Global ex-US Moat Focus IndexSM (MGEUMFUN) bested the MSCI All Country World Index ex USA for the month (8.89% vs. 8.13%), adding to its strong relative performance year-to-date (2.62% vs. -0.38%).
U.S. Domestic Moats: Bounce Back in Discretionary
Consumer staples firms were strong contributors to MWMFTR's returns for the month. Firms such as Harley-Davidson (NYSE:HOG), Polaris Industries (NYSE:PII), and Time Warner Inc. (NYSE:TWX) recovered from challenges earlier in the year to post strong gains. By contrast, several U.S. moat-rated banks struggled in March relative to other financials companies in the Index. Express Scripts (NASDAQ:ESRX) also faltered in March amid continued negotiation turmoil with health insurance company Anthem.
International Moats: Stock Picking is Key
MGEUMFUN's exposure to financials companies and its selection of companies within the sector contributed significantly to positive performance for the month. Financial firms from Australia, Hong Kong, and Canada performed well in March. One exception was the Swiss firm UBS Group (NYSE:UBS), which struggled after being added to MGEUMFUN in late March. Overall, Index companies from Australia, Hong Kong, and Canada drove performance, while Belgian, Israeli, and Swiss firms detracted most from returns.
Strong performance paired with several lowered fair value estimates by Morningstar analysts contributed to the highest turnover rate in the history of the MWMFTR Index. Sixteen of the Index's 20 companies were replaced as a result of its March review. Two firms, International Business Machines (NYSE:IBM) and Qualcomm Inc. (NASDAQ:QCOM), were removed from the Index as a result of an economic moat rating downgrade.
MGEUMFUN once again experienced significant turnover in March due to valuation changes and share price momentum. Twenty-four of the Index's 50 constituents were replaced as a result of its March review. See below for a full list of the review results for both indices.
Monthly Index Total Returns
Top/Bottom Index Performers
This commentary is not intended as a recommendation to buy or to sell any of the named securities. Holding will vary for the MOAT and MOTI ETFs and their corresponding Indices.
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 (NYSEARCA: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 (NYSEARCA: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 (NYSE: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 800.826.2333. Please read the prospectus and summary prospectus carefully before investing.