MOATs defend against losses in March


For investors in US moats, March results were moderate reflecting both political and economic uncertainty.

In March the VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT) returned 0.48%.

For investors in US moats, March results were moderate reflecting both political and economic uncertainty. The stock market euphoria that followed President Trump's election continued to dissipate and his administration suffered two major strikes: courts blocked new travel restrictions and the House’s vote on the Republican's healthcare reform was cancelled at the last minute due to lack of support. Sentiment may be shifting on Trump's ability to implement his pro-growth agenda. The Federal Reserve struck another blow for US stocks with its 0.25% rate increase on 15 March.

For March, Morningstar® Wide Moat Focus Index™ (MOAT Index) marginally outperformed the S&P 500 Index (0.52% vs. 0.48%).  MOAT Index has outperformaned year-to-date the S&P 500 Index by 2.30% (2.51% vs. 0.21%).

US consumer discretionary companies such as Lowe's Companies, Inc. (LOW US, +10.54%) and Harley-Davidson, Inc. (HOG US, +10.41%) were the top two performers for the Moat Index. Negative performers included poor showings by several healthcare and industrials firms. Biotech companies Amgen, Inc. (AMGN US, -7.06%) and Biogen, Inc. (BIIB US, -5.26%) struggled along with aerospace supplier, TransDigm Group, Inc. (TDG US, -13.39%).

Index Review Results

On 17 March  MOAT Index rebalanced. In accordance with its staggered rebalance methodology, one of the two sub-portfolios in the Index was reviewed and rebalanced at this time.

Nine companies were swapped in the sub-portfolio under review. Of these nine, seven had previously been removed from the Index's other sub-portfolio and therefore were removed from the Index entirely. L Brands, Inc. (LB US), Yum! Brands, Inc. (YUM US), Yum China Holdings, Inc. (YUMC US), and Quintiles IMS Holdings, Inc. (Q US) were the new entrants to the Index of the nine added to the sub-portfolio under review. The Moat Index now contains 47 constituents.

Performance data:
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.

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 will be available after the end of the exposure period at 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