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For the Month Ending March 31, 2018
The volatility and sell-off experienced across markets in February continued to some degree in March, with varying impact on moat companies. 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 again in March (-1.35% vs. -1.76%, respectively). The U.S.-oriented Morningstar® Wide Moat Focus IndexSM (MWMFTR, or "U.S. Moat Index") lagged the broad U.S. market as represented by the S&P 500® Index (-3.49% vs. -2.54%, respectively).
There were several bright spots among moat-rated companies in the International Moat Index in March. Driven by ENN Energy Holdings Ltd. (2688 HK, +15.91%), Gas Natural SDG SA (GAS SM, +3.92%), and China Resources Gas Group Ltd. (1193 HK, +2.92%), utilities was the top contributing sector to the index despite its relatively small weighting. Medical technology firm Elekta AB (EKTAB SS, +16.06%) was the top performer in the index, following strong third quarter results that point to a continued recovery for the firm. Despite these strong performers, the International Moat Index could not escape March’s deteriorating market conditions. Financials was the top detracting sector from index performance, with Australia bank Westpac Banking Corp. (WBC AU, -10.08%) leading the sector’s underwhelming performance. Westpac, Australia’s oldest bank, continued to trade at a discount to Morningstar’s fair value estimate at month-end. MGM China Holdings Ltd. (2282 HK, -12.40%) also struggled in March following a long-term run-up in the major Macau gaming companies since late 2016. Interestingly, Morningstar now views these companies as near or over fair value. At the index’s first quarter review in late March, ENN Energy Holdings Ltd., Elekta AB, and MGM China Holdings Ltd. were removed from the index.
Healthcare was once again the culprit driving the U.S. Moat Index’s weak performance. The sector has been overweight in the index since early 2016 and has experienced multiple swings in performance as several headline-worthy events unfolded. Remarks by President Trump, innovative private healthcare announcements, and the attempted repeal of the Affordable Care Act have all impacted the sector since early 2016. Patterson Companies Inc. (PDCO US, -29.61%) inflicted its last bit of damage on the U.S. Moat Index prior to exiting the index at the March review as a result of its moat rating downgrade. L Brands (LB US, -22.54%), another volatile index constituent in recent months, continues to face near-term headwinds, resulting in a fair value estimate reduction in mid-April by Morningstar analysts. Morningstar does still believe in L Brands’ long-term moat rating but is continuing to monitor its store’s growth plans, namely Victoria’s Secret. Excluding the two aforementioned worst performers, the index performed more in-line with the broad U.S. market.
|TransDigm Group Inc||6.46|
|Veeva Systems Inc Class A||4.76|
|Microchip Technology Inc||2.73|
|Patterson Companies Inc||-29.61|
|L Brands Inc||-22.54|
|Wells Fargo & Co||-10.27|
|Bank of New York Mellon Corp||-9.64|
|Elekta AB B||16.06|
|ENN Energy Holdings Ltd||15.91|
|KION GROUP AG||8.36|
|MGM China Holdings Ltd||-12.40|
|GEA Group AG||-10.55|
|SoftBank Group Corp||-10.08|
|Westpac Banking Corp||-8.44|
|McDonald's Corp||MCD US|
|Procter & Gamble||PG US|
|General Mills Inc||GIS US|
|Dominion Energy Inc||D US|
|Campbell Soup Co||CPB US|
|Hershey Foods Corp||HSY US|
|Cheniere Energy Inc||LNG US|
|Microchip Technology Inc||MCHP US|
|Comcast Corp A||CMCSA US|
|Franklin Resources Inc||BEN US|
|PepsiCo Inc||PEP US|
|Visa Inc A||V US|
|VF Corp||VFC US|
|Polaris Inds Inc||PII US|
|The Bank of New York Mellon Corp||BK US|
|Veeva Systems Inc A||VEEV US|
|United Technologies Corp||UTX US|
|TransDigm Group||TDG US|
|CBRE Group Inc.||CBG US|
|Bristol-Myers Squibb||BMY US|
|Emerson Electric Co||EMR US|
|Patterson Cos Inc||PDCO US|
|Beijing Enterprises Holdings Ltd.||China|
|Vodafone Group||United Kingdom|
|Grupo Aeroportuario del Pacifico,||Mexico|
|Sun Hung Kai Properties Ltd.||Hong Kong|
|KION Group AG||Germany|
|SK Telecom Co Ltd||South Korea|
|Genting Singapore Plc||Singapore|
|Koninklijke KPN NV||Netherlands|
|Beijing Capital International Airport Co. Ltd.||China|
|Brambles Industries Ltd||Australia|
|Banco Bilbao Vizcaya Argentaria SA||Spain|
|Rolls-Royce Holdings Plc||United Kingdom|
|CapitaLand Mall Trust REIT||Singapore|
|Uni Charm Corp||Japan|
|Svenska Handelsbanken A||Sweden|
|Hong Kong Land Hldgs Ltd||China|
|Smiths Group||United Kingdom|
|Seven & I Holdings Co Ltd||Japan|
|Canadian Pacific Railway Ltd||Canada|
|Cemex SA CPO||Mexico|
|America Movil SAB de CV L||Mexico|
|Luxottica Group SpA||Italy|
|Crown Resorts Ltd||Australia|
|Sonic Healthcare Ltd||Australia|
|Westpac Banking Corp||Australia|
|Commonwealth Bank Australia||Australia|
|QBE Insurance Group Ltd||Australia|
|Magellan Financial Group Limited||Australia|
|MGM China Holdings Ltd||Hong Kong|
|Roche Hldgs AG Ptg Genus||Switzerland|
|Sina Corp (Caymans)||China|
|ENN Energy Holdings Ltd||China|
|DBS Group Holdings||Singapore|
|KBC Group NV||Belgium|
This commentary is not intended as a recommendation to buy or to sell any of the named securities. Holdings will vary for the MOAT and MOTI ETFs and their corresponding Indices.
An investor cannot invest directly in an index. Returns reflect past performance and do not guarantee future results. Results reflect the reinvestment of dividends and capital gains, if any. Index returns do not represent Fund returns. The Index does not charge management fees or brokerage expenses, nor does the Index lend securities, and no revenues from securities lending were added to the performance shown.
Fair value estimate: the Morningstar analyst's estimate of what a stock is worth.
Price/Fair Value: ratio of a stock's trading price to its fair value estimate.
The Morningstar® Wide Moat Focus IndexSM and Morningstar® Global ex-US Moat Focus IndexSM were created and are maintained by Morningstar, Inc. Morningstar, Inc. does not sponsor, endorse, issue, sell, or promote the VanEck Vectors Morningstar Wide Moat ETF or VanEck Vectors Morningstar International Moat ETF and bears no liability with respect to the ETFs or any security. Morningstar® is a registered trademark of Morningstar, Inc. Morningstar Wide Moat Focus Index and Morningstar Global ex-US Moat Focus Index are service marks of Morningstar, Inc.
The Morningstar® Wide Moat Focus IndexSM consists of U.S. companies identified as having sustainable, competitive advantages and whose stocks are attractively priced, according to Morningstar.
The Morningstar® Global ex-US Moat Focus IndexSM consists of companies outside of the U.S. identified as having sustainable, competitive advantages and whose stocks are attractively priced, according to Morningstar.
The S&P 500® Index is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Van Eck Associates Corporation. Copyright © 2018 S&P Dow Jones Indices LLC, a division of S&P Global, Inc., and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC's indices please visit www.spdji.com. S&P is a registered trademark of S&P Global and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. Neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third-party licensors make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third-party licensors shall have any liability for any errors, omissions, or interruptions of any index or the data included therein.
The MSCI All Country World Index ex USA Index captures large and mid-cap representation across 22 of 23 developed markets countries (excluding the U.S.) and 24 emerging markets countries.
Effective June 20, 2016, Morningstar implemented several changes to the Morningstar® Wide Moat Focus IndexSM construction rules. Among other changes, the index increased its constituent count from 20 stocks to at least 40 stocks and modified its rebalance and reconstitution methodology. These changes may result in more diversified exposure, lower turnover, and longer holding periods for index constituents than under the rules in effect prior to this date.
Effective June 20, 2016, Morningstar implemented several changes to the Morningstar® Global ex-US Moat Focus IndexSM construction rules. Among other changes, the index increased its constituent count from 50 stocks to at least 50 stocks and modified its rebalance and reconstitution methodology. These changes may result in more diversified exposure, lower turnover, and longer holding periods for index constituents than under the rules in effect prior to this date.
An investment in VanEck Vectors Morningstar Wide Moat ETF (MOAT®) may be subject to risks which include, among others, investing in the health care, consumer discretionary, industrials, financial services sectors, medium-capitalization companies, equity securities, market, operational, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversified, and concentration risks, which may make these investments volatile in price or difficult to trade. Medium-capitalization companies may be subject to elevated risks. The 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.
An investment in VanEck Vectors Morningstar International Moat ETF (MOTI®) may be subject to risks which include, among others, equity securities, investing in the financial services, health care, industrials and telecommunication sectors, medium-capitalization companies, foreign securities, foreign currency, emerging market issuers, special risk considerations of investing in Asian and European issuers, depositary receipts, cash transactions, market, operational, high portfolio turnover, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversified, and concentration risks, which may make these investments volatile in price or difficult to trade. Foreign investments are subject to risks, which include changes in economic and political conditions, foreign currency fluctuations, changes in foreign regulations, and changes in currency exchange rates which may negatively impact the Fund's returns. Medium-capitalization companies may be subject to elevated risks. The 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.
ETF shares are not individually redeemable and will be issued and redeemed at their Net Asset Value (NAV) only through certain authorized broker-dealers in large, specified blocks of shares called "creation units" and otherwise can be bought and sold only through exchange trading. Shares may trade at a premium or discount to their NAV in the secondary market. You will incur brokerage expenses when trading ETF shares in the secondary market. Past performance is no guarantee of future results.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider a Fund's investment objective, risks, charges and expenses carefully before investing. To obtain a prospectus and summary prospectus for VanEck Funds and VanEck Vectors ETFs, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus for VanEck Funds and VanEck Vectors ETFs carefully before investing.
Morningstar Wide Moat ETF
|Index:||Morningstar® Wide Moat Focus IndexSM (MWMFTR)|
Wide Moat Fund
|Index:||Morningstar® Wide Moat Focus IndexSM (MWMFTR)|
Morningstar International Moat ETF
|Index:||Morningstar® Global ex-US Moat Focus IndexSM (MGEUMFUN)|
Global Wide Moat ETF
|Index:||Morningstar® Global Wide Moat Focus IndexSM (MSGWMFNU)|
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Investing involves risk, including possible loss of principal. An investor should carefully consider investment objectives, risks, charges and expenses carefully before investing. This and other information can be found in the appropriate regulatory documents made available for a specified country as designated in this website.