Profiting immensely from secure Exchange-Traded Funds (ETFs) due to robust burghgraves worldwide
The financial landscape has been enriched with the introduction of two new ETFs from VanEck and Morningstar, launched in January 2024. These Exchange-Traded Funds (ETFs) follow a moat strategy, a popular approach for investors seeking companies with a competitive advantage that is difficult for competitors to replicate.
The VanEck Morningstar US Wide Moat ETF and the VanEck Morningstar US SMID Moat ETF are designed to invest in companies with a slightly different selection of titles compared to the sustainable variant. The US Wide Moat ETF, for instance, includes Transunion, Allegion, RTX Corporation, Adobe, Pfizer, and Tyler Technologies, among others. On the other hand, the US SMID Moat ETF focuses on stocks of US small- and mid-cap companies, such as Asbury Automotive, Hasbro, Chart Industries, and Carmax.
For those who prefer a global perspective, the VanEck Morningstar Global Wide Moat ETF offers an expanded investment opportunity. This fund holds 74 positions worldwide, including Westpac Banking, Sanofi, Imperial Brands, and the aforementioned US-based companies.
Morningstar, a well-respected research firm, partners with VanEck to define the strength of a moat. Companies are categorised into three areas: those with a wide moat, those with a narrow moat, and those without a moat. Morningstar considers five sources for a moat: intangible assets, switching costs, network effects, cost advantages, and economies of scale. Quantitative factors, such as Return on Capital (ROC), are also taken into account in their moat evaluation.
Moreover, the VanEck Morningstar US Sustainable Wide Moat ETF, with a total of 62 positions, considers Environmental, Social, and Governance (ESG) criteria, making it an attractive option for socially-conscious investors.
Investing in a moat strategy can be a smart choice for those who prefer to avoid individual stocks. By investing in funds and ETFs, investors can diversify their portfolio while still targeting companies with a competitive edge. VanEck, with its proven track record in ETFs, is a popular choice for those following this strategy.
However, it's important to note that while these ETFs aim to invest in companies with strong competitive advantages, they are not immune to market fluctuations. As with any investment, it's crucial to do thorough research and consider your own risk tolerance before making a decision.
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