MOATs defend against losses in March

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.}

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