MOAT - August performance attribution


For US wide moats, the summer doldrums continued in August, with the Morningstar® Wide Moat Focus IndexTM  (MOAT Index) returning -0.69% versus 0.31% for the S&P 500® Index.

For the Month Ending 31 August, 2017

Performance attribution

For US wide moats, the summer doldrums continued in August, with the Morningstar® Wide Moat Focus IndexTM  (MOAT Index) returning -0.69% versus 0.31% for the S&P 500® Index.

L who?

The largest detractor from Moat Index's performance in August was L Brands, Inc. (L US, -19.83%). This followed a tough July for the company. The retail conglomerate, best known for its Victoria's Secret brand, has struggled lately and Morningstar analysts lowered its fair value price by $2 in August citing weaker-than-expected near-term earnings following the second quarter earnings report. Even so, Morningstar recently reaffirmed its moat rating in an August research note: "We continue to think that L Brands has a wide economic moat, with brand strength in a category characterised by high levels of consumer brand loyalty and prioritisation of quality and fit over price."

Walt Disney Co. (DIS US, -7.94%) was another detractor. Disney continues to suffer from declines in its studio and consumer products segments, even though the company has enjoyed strong growth in its parks and resorts.

With L Brands, and Walt Disney, consumer discretionary was the sector that detracted most form relative performance.  Information technology was the top contributing index sector in August, while the healthcare sector was relatively flat; strong performance of biotech firms was offset by weak performance from healthcare distribution companies.

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 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