MOAT goes ESG
18 December 2021
The VanEck Morningstar US Wide Moat UCITS ETF began tracking Morningstar US Sustainable Moat Focus Index after the market close on 17 December 2021. The fund was renamed VanEck Morningstar US Sustainable Wide Moat UCITS ETF to reflect the updated investment strategy. As a result of the change, investors in the ETF receive a more sustainable exposure, while maintaining the benefits of the existing investing approach, based on buying relatively attractively priced shares of companies possessing long-term competitive advantages.
Rationale
VanEck is striving to improve its sustainable footprint by increasingly focusing on products following sustainable investment strategies. VanEck Morningstar US Wide Moat UCITS ETF had not directly incorporated any Sustainability considerations. Conversely, the new underlying index of the ETF will introduce product involvement screens related to controversial weapons, civilian firearms and thermal coal, as well as companies deriving majority of the revenues from Tobacco. It will also screen companies involved in severe controversies during the last three years and those with elevated levels of ESG- and Carbon-related risks, according to Sustainalytics.
What will change in the investment process?
In addition to selection parameters incorporated in the incumbent index to select attractively valued companies with long-term competitive advantages, the Morningstar US Sustainability Moat Focus Index only includes stocks with the following attributes:
- Product Involvement
- No involvement in production of controversial weapons
- No involvement in civilian firearms production
- No involvement in Thermal Coal extraction or power generation
- Not more than 50% of revenue derived from Tobacco Production and Distribution
- Sustainalytics ESG Scores
- ESG Risk rating not High or Severe
- Carbon Risk rating not High or Severe
- Controversy rating of “Severe” not reached at any point in time during the last 3 years
- Momentum Screen
- Not in the worst 20% of yearly performers among eligible securities
Additionally, the index selection targets a Sustainalytics ESG Risk score equivalent to top 32.5% in the respective Morningstar Fund universe by means of iterative selection process that will replace the worst ESG performers until the target score is reached. The rebalancing frequency of the sub-portfolios will change from Semi-Annual to Annual . For further information about the change, please consult the Q&A we published on 24 November 2021. Investors should always consider risks before investing.
Important Disclosure
For informational and advertising purposes only.
This information originates from VanEck (Europe) GmbH which has been appointed as distributor of VanEck products in Europe by the Management Company VanEck Asset Management B.V., incorporated under Dutch law and registered with the Dutch Authority for the Financial Markets (AFM). VanEck (Europe) GmbH with registered address at Kreuznacher Str. 30, 60486 Frankfurt, Germany, is a financial services provider regulated by the Federal Financial Supervisory Authority in Germany (BaFin). The information is intended only to provide general and preliminary information to investors and shall not be construed as investment, legal or tax advice. VanEck (Europe) GmbH and its associated and affiliated companies (together “VanEck”) assume no liability with regards to any investment, divestment or retention decision taken by the investor on the basis of this information. The views and opinions expressed are those of the author(s) but not necessarily those of VanEck. Opinions are current as of the publication date and are subject to change with market conditions. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. All indices mentioned are measures of common market sectors and performance. It is not possible to invest directly in an index.
VanEck Asset Management B.V., the management company of VanEck Morningstar US Sustainable Wide Moat UCITS ETF (the "ETF"), a sub-fund of VanEck UCITS ETFs plc, is a UCITS management company under Dutch law registered with the Dutch Authority for the Financial Markets (AFM). The ETF is registered with the Central Bank of Ireland and tracks an equity index. The value of the ETF’s assets may fluctuate heavily as a result of the investment strategy. If the underlying index falls in value, the ETF will also lose value.
Investors must read the sales prospectus and key investor information before investing in a fund. These are available in English and the KIDs in certain other languages as applicable and can be obtained free of charge at www.vaneck.com, from the local facility agent VanEck (Europe) GmbH or from the Management Company.
Morningstar® US Sustainability Moat Focus Index is a trademark of Morningstar Inc. and has been licensed for use for certain purposes by VanEck. VanEck Morningstar US Sustainable Wide Moat UCITS ETF is not sponsored, endorsed, sold or promoted by Morningstar and Morningstar makes no representation regarding the advisability in VanEck Morningstar US Sustainable Wide Moat UCITS ETF.
All performance information is historical and is no guarantee of future results. Investing is subject to risk, including the possible loss of principal. You must read the Prospectus and KID before investing.
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