A comeback story for US Moats in November
A comeback story for US Moats in November which recovered and outpaced stocks across the US.
For the month ending 30 November 2017
Performance overview
The Morningstar® Wide Moat Focus Index™ (MOAT Index) bounced back in November after several underwhelming months, outpacing the broad US markets as represented by the S&P 500 Index (5.35% vs. 4.29%).
Performance attribution
L Brands, Inc. (LB US, +31.88%) recovered in a big way throughout the month, following a difficult summer. Morningstar equity analysts pointed out recently that the company's performance metrics are trending in the right direction despite some problems with its Victoria's Secret and Bath & Body Works brands. Morningstar's fair value estimate for L Brands was adjusted down in August from $71 to $69 following weaker-than-expected near-term earnings and remains at $69 following third-quarter earnings. Consumer discretionary, led by L Brands, was the top contributing sector for the US Moat Index, followed by strong contributions by healthcare and financials companies.
Industrials was the only sector to detract from performance, driven primarily by negative performance from General Electric Co. (GE US, -9.28%). Morningstar's fair value estimate for GE was reduced in November from $29 to $26 as the company continues to grapple with a long-term restructuring effort.
Important Disclosures
This commentary is not intended as a recommendation to buy or sell any of the named securities. Holdings will vary for MOAT and MOAT Index.
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.
This information is general in nature and not financial advice. It does not take into account any person’s individual objectives, financial situation or needs. Before making an investment decision investors should read the product disclosure statement and with the assistance of a financial adviser consider if it is appropriate for their circumstances. A copy of the PDS is available atwww.vaneck.com.au or by calling 1300 68 38 37.
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