Moats open 2018 in strong position
Wide moats started strong in 2018, ending ahead of the broad market S&P 500 index in January.
For the Month Ending 31 January, 2018
Performance overview
Wide moat moats started 2018 well, continuing progress from last year. The Morningstar® Wide Moat Focus IndexTM (MOAT Index) marginally outperformed the broad US markets as represented by the S&P 500® Index (2.52% vs. 2.50%, respectively).
Attribution: Amazing Amazon
Amazon was the top performing constituent in the MOAT Index for January, and its quarterly results triggered an upward fair value revision from US$1,250 per share to US$1,600 by Morningstar equity analysts at the beginning of February. Meanwhile, Amazon, Berkshire Hathaway, and J.P. Morgan sent shockwaves through the healthcare sector, which has had a large weight in the Index for several quarters, when they announced their joint health care effort at the end of the month. Despite the announcement, health care was the strongest sector contributor to Moat Index returns in January.
No single sector detracted from returns for the period, but a few companies did struggle, such as L Brands Inc. (LB US, -16.82%). The retailer has seen its share price whipsaw over the past year, but Morningstar has maintained its wide moat rating and current US$69 fair value estimate.
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 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 at www.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