Moat Index Keeps Tech in Check, Value in Focus

Key Takeaways

• Moat Index holds largest tech underweight vs. S&P 500 since start of 2025.
• 17 companies moved in and out of the Index, including five brand-new names.
• Contrarian positioning is reinforced by 18% discount to fair value, according to Morningstar’s price to fair value ratio.

The Morningstar^® Wide Moat Focus Index^SM (the “Moat Index” or “Index”) underwent its quarterly review on September 19, 2025. The Index systematically targets attractively priced, high quality U.S. companies each quarter, as identified by Morningstar’s equity research analysts. Below are a few highlights from the latest review. The full results are available here:

Moat Index Review Highlights:

• Tech Weight Pared Following Strong Quarter for Software and Semis

  The Moat Index’s tech sector weight dropped by about 8% and sits at a 13% underweight compared to the S&P 500 Index. This is the largest underweight since the beginning of 2025. Additionally, the exposure within tech continues to differ from the broader market with a focus on undervalued application software and semiconductor companies. Beyond tech, Magnificent 7 company exposure continues to be significantly underweight at 4.3% versus 34.2% in the S&P 500 Index.

• High Turnover Quarter Brings First-Time Entrants

  There were 17 total companies added and removed from the sub-portfolio under review this quarter. A few moat rating downgrades were added to the list of valuation-driven changes following a quarter of market volatility. Among the additions were five companies that are being added to the Moat Index for the first time: Airbnb, Broadridge, Copart, Entegris and Jack Henry & Associates.

• Valuation Focus Offers Contrarian Exposure and Valuation Buffer

  The value style remains the notable overweight relative to the broad market. This trend has been in place for the better part of the last two years as U.S. equity markets have appreciated consistently, despite periods of short-term volatility. The Moat Index’s price-to-fair value was reduced from about 0.87 to 0.82 following the review, implying an 18% discount to fair value. This stands in stark contrast to the S&P 500 Index, which is currently 4% overvalued (1.04 price-to-fair-value ratio).

3Q 2025 Moat Index Review Results

Moat Index Sector Shifts Following 3Q 2025 Review

Moat Index Sector Exposure Relative to S&P 500 Index

Moat Index Style Exposure Relative to S&P 500 Index: Value Bias Persists

Source: Morningstar. As of 9/19/2025 unless otherwise noted.

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VanEck Morningstar Wide Moat ETF (MOAT) and VanEck Morningstar Wide Moat Fund seek to replicate as closely as possible, before fees and expenses the price and yield performance of the Morningstar Wide Moat Focus Index.