Global Moats Make Comeback In September

|
Includes: MOAT, MOTI
by: VanEck

For the Month Ending September 30, 2017

Performance Overview

Global moat stocks underperformed their respective broad markets in September. International moats, as represented by the Morningstar® Global ex-US Moat Focus IndexSM ( MGEUMFUN, or "International Moat Index"), posted a 1.46% return compared to 1.86% for the MSCI All Country World Index ex-USA (MSCI ACWI ex-USA). September joined April as the only months the International Moat Index underperformed the broad market in 2017. Together, these two occurences accounted for a total lag of 0.57%. The International Moat Index's year-to-date outperformance remains well ahead for 2017 (27.36% versus 21.13% for the MSCI ACWI ex-USA). The U.S.-oriented Morningstar® Wide Moat Focus IndexSM ( MWMFTR, or "U.S. Moat Index") trailed the S&P 500® Index slightly in September (1.94% vs. 2.06%).

International Moats: Macau gaming bounces back

MGM China Holdings Ltd. (2282 HK, OTCPK:MCHVY, +19.63%) was the standout performer in the International Moat Index for the month, while SINA Corp. (SINA, +12.59%) was the top contributor, due to its larger weighting in the Index. Both companies operate in Asia. MGM China Holdings derives the majority of its revenue from Macau and SINA Corp from China. SINA's Weibo platform, a twitter-like social media network, has been its key growth driver. The International Moat Index also saw strong contributions from industrials and health care companies, as well as German, Canadian, and Dutch companies. The real estate sector detracted the most, and exposures to Singapore, Canada, Japan, and Mexico all detracted from the Index in September.

U.S. Domestic Moats: L Brands, a tale of two months

Financials and consumer discretionary stocks were the top contributors to U.S. Moat Index performance in September. Victoria's Secret and Bath and Body Works operator L Brands, Inc. (L, +14.88%) was the top performer in the Index, following two consecutive negative performing months. Financials firms T. Rowe Price Group, Inc. (TROW, +8.18%) and Wells Fargo & Co. (WFC, +7.99%) were also strong performers for the month. The bottom performing U.S. Moat Index constituent was Allergan PLC (AGN, -10.69%). The drug manufacturer faced two setbacks in its development pipeline in September causing a selloff. Despite pipeline setbacks, Morningstar analysts believed Allergan represents an attractive value in a September 25 research note.

Monthly Index Return

One Year Index Returns

Top/Bottom Index Performers

Index Reconstruction

Important Disclosures

This commentary is not intended as a recommendation to buy or to sell any of the named securities. Holdings 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 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 VanEck Vectors® Morningstar Wide Moat ETF or VanEck 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 IndexSM consists of U.S. companies identified as having sustainable, competitive advantages and whose stocks are attractively priced, according to Morningstar.

The Morningstar® Global ex-US Moat Focus IndexSM consists of companies outside of the U.S. identified as having sustainable, competitive advantages and whose stocks are attractively priced, according to Morningstar.

The S&P 500 Index ("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 © 2017 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.

The MSCI All Country World Index ex USA Index captures large and mid-cap representation across 22 of 23 Developed Markets countries (excluding the U.S.) and 24 Emerging Markets countries.

Effective June 20, 2016, Morningstar implemented several changes to the Morningstar® Wide Moat Focus IndexSM 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.

Effective June 20, 2016, Morningstar implemented several changes to the Morningstar® Global ex-US Moat Focus IndexSM construction rules. Among other changes, the index increased its constituent count from 50 stocks to at least 50 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.

An investment in VanEck Vectors® Morningstar Wide Moat ETF (NYSEARCA:MOAT) may be subject to risks which include, among others, investing in the health care, consumer discretionary, industrials, information technology and financial services sectors, medium-capitalization companies, equity securities, market, operational, high portfolio turnover, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, replication management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversified, and concentration risks, 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.

An investment in VanEck Vectors® Morningstar International Moat ETF (NYSEARCA:MOTI) may be subject to risks which include, among others, equity securities, investing in the financial services and consumer discretionary sectors, medium-capitalization companies, foreign securities, foreign currency, emerging market issuers, special risk considerations of investing in European, Asian and Australian issuers, depositary receipts, cash transactions, market, operational, high portfolio turnover, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, replication management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversified, and concentration risks, which may make these investments volatile in price or difficult to trade. Foreign investments are subject to risks, which include changes in economic and political conditions, foreign currency fluctuations, changes in foreign regulations, and changes in currency exchange rates which may negatively impact the Fund's returns. 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. 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, visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.

About this article:

Expand
Want to share your opinion on this article? Add a comment.
Disagree with this article? .
To report a factual error in this article, click here