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  • Moat Investing

    Few Spared in Global Market Sell-Off

    Brandon Rakszawski ,Senior ETF Product Manager
    March 09, 2018
     

    For the Month Ending February 28, 2018

    Performance Overview

    Global markets saw a widespread sell-off in February, and moat stocks were no exception. International moats, as represented by the Morningstar® Global ex-US Moat Focus IndexSM (MGEUMFUN, or "International Moat Index"), led the MSCI All Country World Index ex-USA in February by a small margin (-4.61% vs. -4.72%, respectively). The U.S.-oriented Morningstar® Wide Moat Focus IndexSM (MWMFTR, or "U.S. Moat Index") trailed the broad U.S. markets as represented by the S&P 500® Index (-4.58% vs. -3.69%, respectively).

    International Moats: Navigating the Turmoil with Few Bright Spots

    As markets overall struggled, a few international moat-rated companies stood out with strong performance in February. Singapore bank DBS Group Holdings Ltd. (DBS SP, +7.59%) built on previous momentum, posting strong results in February capped by a special dividend for shareholders. Aerospace companies Embraer SA (EMBR3 BZ, +5.95%) and Airbus SE (AIR FP, +4.09%) also had strong performance for the month. The financials sector and German companies were the top detracting sector and country, respectively, while Mexican cement maker CEMEX SAB de CV (CEMEXCPO MM, -20.79%) posted an unexpected fourth quarter loss, which earned it the spot of the worst performing International Moat Index constituent by a wide margin.

    U.S. Domestic Moats: Healthcare Not so Healthy

    Healthcare, as a whole, dragged significantly on U.S. Moat Index performance in February. The sector accounted for three of the five worst performing constituents: Biogen Idec, Inc. (BIIB US, -16.91%), Stericycle Inc. (SRCL US, -16.84%), and Allergan plc (AGN US, -14.06%). However, several healthcare companies did buck that trend. Bristol-Myers Squibb Co. (BMY US, +5.75%) posted strong fourth quarter results at the beginning of the month, along with positive study results relating to lung cancer treatments. Veeva Systems Inc. (VEEV US, +10.88%), though not a healthcare company, provides client relationship management services to the pharmaceutical industry and posted strong results for the fourth quarter. Meanwhile, home improvement retailer Lowe’s Companies Inc. (LOW US, -14.46%) also disappointed, posting underwhelming quarterly results which drove a fair value downgrade from $93 to $90 by Morningstar equity analysts.

     

    (%) Month Ending 2/28/18

    Domestic Equity Markets

    International Equity Markets

    (%) As of 2/28/18

    Domestic Equity Markets

    International Equity Markets

    (%) Month Ending 2/28/18

    Morningstar
    Wide Moat Focus Index (MWMFTR)

    Top 5 Index Performers
    Constituent Total Return
    Veeva Systems Inc Class A 10.88
    Bristol-Myers Squibb Company 5.75
    Amazon.com Inc 4.24
    CBRE Group Inc 2.32
    Salesforce.com Inc 2.05

    Bottom 5 Index Performers
    Constituent Total Return
    Biogen Inc -16.91
    Stericycle Inc -16.84
    Compass Minerals International Inc -16.30
    Lowe's Companies Inc -14.46
    Allergan PLC -14.06

    View MOAT's current constituents
    View MWMZX's current constituents

    Morningstar
    Global ex-US Moat Focus Index (MGEUMFUN)

    Top 5 Index Performers
    Constituent Total Return
    DBS Group Holdings Ltd 7.59
    Kao Corp 6.21
    Embraer SA 5.95
    Airbus SE 4.09
    China Resources Gas Group Ltd 2.47

    Bottom 5 Index Performers
    Constituent Total Return
    Cemex SAB de CV CPO Terms:2 Shs-A- & 1 Shs-B- -20.79
    Industria De Diseno Textil SA -15.36
    Vodafone Group PLC -12.10
    Enbridge Inc -11.87
    Bayer AG -10.63

    View MOTI's current constituents

    As of 12/15/17

    Morningstar
    Wide Moat Focus Index (MWMFTR)

    Index Additions
    Added Constituent Ticker
    Cardinal Health Inc CAH US
    Veeva Systems Inc A VEEV US
    Merck & Co Inc MRK US
    Western Union Co WU US
    Microchip Technology Inc MCHP US
    NIKE Inc NKE US

    Index Deletions
    Deleted Constituent Ticker
    Berkshire Hathaway BRK/B US
    BlackRock Inc BLK US
    CH Robinson Worldwide Inc CHRW US
    Patterson Cos Inc PDCO US
    Polaris Inds Inc PII US
    T Rowe Price Group Inc TROW US

    View Latest MOAT Reconstitution Report
    View MOAT's list of current constituents

    Morningstar
    Global ex-US Moat Focus Index (MGEUMFUN)

    Index Additions
    Added Constituent Country
    Telecom Italia SpA Italy
    Lloyds Banking Group Plc United Kingdom
    SoftBank Group Corp Japan
    Beijing Enterprises Holdings Ltd. China
    Millicom Intl Cellular S.A. - SDR Sweden
    Bank of China Ltd H Shares China
    Nordea AB Sweden
    Gas Natural SDG SA Spain
    Bayer AG Germany
    Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. Mexico
    Smiths Group United Kingdom
    GKN United Kingdom
    Swedbank AB Sweden
    TransCanada Corp Canada
    KDDI Corp Japan
    GEA AG Germany
    Danske Bank A/S Denmark
    Samsonite International SA Hong Kong
    Contact Energy Ltd New Zealand
    Vodafone Group United Kingdom
    Siemens AG Germany
    Grupo Aeroportuario del Pacifico, S.A.B. de C.V. Mexico
    Infosys Ltd India

    Index Deletions
    Deleted Constituent Country
    Cemex SA CPO Mexico
    Symrise AG Germany
    HeidelbergCement AG Germany
    China Telecom Corporation Ltd. - H Shares China
    ENN Energy Holdings Ltd China
    Nippon Tel & Tel Corp Japan
    Nidec Corp Japan
    Murata Manufacturing Co Ltd Japan
    Telefonica Brasil S.A. - Prf Brazil
    GlaxoSmithKline United Kingdom
    Ansell Ltd Australia
    CSL Ltd Australia
    QBE Insurance Group Ltd Australia
    Novartis AG Switzerland
    Julius Baer Group Switzerland
    Elekta B Switzerland
    Danone France
    Safran SA France
    Bureau Veritas SA France
    Tata Motors Ltd India
    DBS Group Holdings Singapore
    CapitalLand Commercial Trust Singapore

    View Latest MOTI Reconstitution Report
    View MOTI's list of current constituents