2016: A strong year for moats


MOAT's 2016 stand-out performance of 22.3%

The US equity Morningstar® Wide Moat Focus IndexTM  “MOAT Index” finished the year well ahead of the S&P 500® Index (22.95% vs. 12.49%). Several companies in the Moat Index stood out in 2016 to boost performance.

Sources of 2016 Outperformance

Strong stock selection and sector allocation benefited the Moat Index in 2016 and led to its strongest calendar year of outperformance compared to the S&P 500 Index since 2009.

Strong performance was driven primarily by the information technology, consumer discretionary, industrials, and financials sectors. By contrast, no single sector detracted from performance in 2016.

Merger and acquisition (M&A) activity played a major role in the performance of several constituents. The acquisition of LinkedIn Corp. (LNKD US, +73.26) by Microsoft Corp. (MSFT US) provided a catalyst which made LinkedIn the strongest performing constituent stock during its inclusion in the Index. Furthering the M&A theme, St. Jude Medical, Inc. (STJ US, 41.05%) was also a standout while in the Index due to an acquisition announced by Abbott Laboratories (ABT US). Additionally, Time Warner, Inc. (TWX US, +52.24%) benefited while in the Index from the announced AT&T (T US) merger.

Several firms performed well on their own merits while in the Moat Index in 2016. Spectra Energy Corp (SE US, +31.94%) was a standout early in the year before exiting in the index as the only energy sector constituent for 2016.

Although positives outweighed negatives, the Moat Index did not end the year unscathed. Despite a strong rebound following the US elections, several biotech firms were unable to erase losses from earlier in the year and ended the period in the red while in the Index: Biogen, Inc. (BIIB US), Gilead Sciences, Inc. (GILD US), and Allergan plc (AGN US).

Source: VanEck, Morningstar.  Stock returns in US dollars all other returns in Australian dollars. Index returns are calculated to the last business day of the month and assume immediate reinvestment of all dividends and exclude costs associated with investing in MOAT. You cannot invest directly in an index. Past performance is not a reliable indicator of future performance of the indices or MOAT.
IMPORTANT NOTICE: Issued by VanEck Investments Limited ABN 22 146 596 116 AFSL 416755 (‘VanEck’). VanEck is a wholly owned subsidiary of Van Eck Associates Corporation based in New York, United States. VanEck Vectors ETF Trust ARBN 604 339 808 (the ‘Trust’) is the issuer of shares in the VanEck Vectors Morningstar Wide Moat ETF (‘US Fund’). The Trust and the US Fund are regulated by US laws which differ from Australian laws. Trading in the US Fund’s shares on ASX will be settled by CHESS Depositary Interests (‘CDIs’) which are also issued by the Trust. The Trust is organised in the State of Delaware, US. Liability of investors is limited. VanEck Associates serves as the investment adviser to the US Fund. VanEck, on behalf of the Trust, is the authorised intermediary for the offering of CDIs over the US Fund’s shares and issuer in respect of the CDIs and corresponding Fund’s shares traded on ASX.
Investment in the US Fund may be subject to risks that include, among others, fluctuations in value due to market and economic conditions or factors relating to specific issuers. Medium capitalisation companies may be subject to elevated risks. The US 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.The Morningstar® Wide Moat Focus Index™ was created and is maintained by Morningstar, Inc. Morningstar, Inc. does not sponsor, endorse, issue, sell, or promote the US Fund and bears no liability with respect to the US Fund or any security. Morningstar®, Morningstar Wide Moat Focus Index™ and Economic Moat ™ are trademarks of Morningstar, Inc. and have been licensed for use by VanEck.

Published: 09 August 2018