SMID-Cap Moats Outpace Large-Caps in August
12 September 2025
Read Time 7 MIN
Key Risks
Equity-market risk; concentration in technology shares; small-/mid-cap volatility; currency fluctuations; integration of sustainability risks may result in certain investments being avoided or divested, which could limit diversification; index methodology risk. These factors can lead to significant losses, and past rallies may not be repeated. Complete information on all risks is available in the prospectus and in the KID/KIID, which can be accessed free of charge at vaneck.com.
Key Takeaways:
- Moat Index rose 1.7%, with semis & healthcare offsetting energy headwinds.
- Monolithic Power and Zimmer Biomet were top Moat Index contributors.
- SMID Moat Index gained 3.1%, outpacing large-cap and equal-weight peers.
- Wynn Resorts and Expedia led SMID Moat gains as consumer demand stayed strong.
- Past performance is not indicative of future results. Capital at risk.
In August, U.S. equity markets extended their summer rally, posting a fourth consecutive month of gains as the S&P 500 advanced 2.0% to notch another record high. Market momentum was supported by continued strength in corporate earnings, resilient consumer spending, and moderating inflation data. Investor optimism was tempered somewhat by ongoing trade negotiations and a mixed set of labor market readings, which revealed both steady job growth and further downward revisions to prior reports. Most sectors posted gains in August, with Materials and Healthcare leading the way. The Federal Reserve held interest rates steady for a third consecutive meeting, though expectations for potential cuts later this year grew stronger as inflation pressures eased. Additionally, small cap leadership signals a healthier, broader rally beyond mega-cap tech.
The Morningstar Wide Moat Focus Index (the “Moat Index”) participated in the August rally along with the broader equity market, posting a gain of 1.7% for the month. The Moat Index lagged the S&P 500, which returned 2.0%. The strategy continues to provide differentiated exposure, which has become increasingly difficult for investors to find, amid historical levels of concentration in the U.S. equity markets.
Small cap stocks saw advances during the month, as comments by the Fed at the Jackson Hole symposium reignited hopes for rate cuts and boosted rate-sensitive small caps. The Morningstar US Small-Mid Cap Moat Focus Index (the “SMID Moat Index”) posted a 3.1% gain in August, outpacing both large-cap and equal weighted benchmarks.
Small Caps Lead the Pack in August
Source: Morningstar. Data as of 31/08/2025. Past performance is no guarantee of future results. Index performance is not representative of fund performance. It is not possible to invest directly in an index. Please see index definitions and other important disclosures at the end of this content.
Moat Index August Highlights: Semiconductors and Joints Drive Gains
In August, sector positioning, more than individual stock selection shaped the Moat Index’s performance. Energy extended its rebound on higher oil prices and strong commodity demand, and the Moat Index has no exposure to this sector. However, positive stock selection within the health care segment as well as strong earnings from several moat companies helped offset sector exposure headwind.
Wide-moat semiconductor producer Monolithic Power Systems (MPWR) was the top contributor to the Moat Index in August, with second-quarter results beating guidance, and management provided a strong third-quarter outlook. Revenue rose 31% year over year and 4% sequentially to $665 million. The midpoint of third-quarter guidance implies 16% year-over-year and 8% sequential growth. Morningstar differentiates Monolithic Power Systems from larger competitors in the power management chip market, given its proprietary process technology. With ramps of new products in data centers and autos, Morningstar raised its fair value estimate to $804 per share after raising their medium-term growth forecast.
Healthcare manufacturer Zimmer Biomet (ZBH) was also a key contributor to Moat Index performance in August, with shares gaining on the back of strong quarterly results and guidance. The firm continues to make steady progress in its core businesses, helped along by adoption of innovation in its hip and knee devices. As the undisputed king of large-joint reconstruction, Morningstar expects aging baby boomers and improving technology suitable for younger patients to fuel solid demand for large-joint replacement that should offset price declines. Morningstar maintains a $130 fair value estimate, as lower tariff burden and working capital improvements are largely offset by the higher cost of absorbing Paragon 28. Shares seem moderately undervalued. However these estimates with regard to individual companies should not be construed as investment advice or recommendation to buy.
Other top contributors within the Moat Index during the month include semiconductor testing company, Teradyne (TER), global technology leader, Alphabet (GOOGL), as well as chip maker, NXP Semiconductors (NXPI).
Companies detracting the most in August came from a mix of sectors, with technology and financials each accounting for two of the five names on the list. Notable detractors included Applied Materials (AMAT), software giant Oracle (ORCL), fixed-income trading platform MarketAxess (MKTX), credit reporting agency TransUnion (TRU), and International Flavors & Fragrances (IFF).
Moat Index Top Contributors and Detractors - August 2025
Contributors
| Company | Ticker | Sector | Avg. Weight (%) | Contribution (%) |
| Monolithic Power Systems Inc | MPWR | Technology | 2.54 | 0.44 |
| Zimmer Biomet Holdings Inc | ZBH | Healthcare | 2.16 | 0.34 |
| Teradyne Inc | TER | Technology | 2.84 | 0.29 |
| Alphabet Inc Class A | GOOGL | Communication Services | 2.57 | 0.28 |
| NXP Semiconductors NV | NXPI | Technology | 2.34 | 0.23 |
Detractors
| Company | Ticker | Sector | Avg. Weight (%) | Contribution (%) |
| Applied Materials Inc | AMAT | Technology | 2.60 | -0.27 |
| MarketAxess Holdings Inc | MKTX | Financials | 2.21 | -0.23 |
| Oracle Corp | ORCL | Technology | 1.86 | -0.20 |
| TransUnion | TRU | Financials | 2.57 | -0.18 |
| International Flavors & Fragrances Inc | IFF | Basic Materials | 2.07 | -0.10 |
Source: Morningstar. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein.
SMID Moat Index August Highlights: Gaming and Travel Lead the Way
The SMID Moat Index performance in August was driven by strong stock selection across several parts of the portfolio. Consumer discretionary was the standout area, with four of the month’s top five contributors coming from this sector. Amid the Federal Reserve drama and deluge of corporate earnings in August, one clear but overlooked trend emerged in U.S. equities: the rotation out of expensive tech stocks and into cheaper small caps, with a S&P SmallCap 600 index monthly gain of 7.1%.
Wynn Resorts (WYNN) topped the SMID Moat Index in August, as the company continues to see resilient demand despite an uncertain economic landscape. Macao gaming revenue saw a 19% rise in July. Morningstar believes the company's focus on a premium offering continues to resonate with consumers. In Macao, demand continues to gradually recover, with Wynn's high-end iconic brand positioned to participate, leading to a low-teens percentage gross gaming revenue share in 2024. Morningstar raised its fair value estimate from $107 to $110 on improved 2025 Macao revenue.
Expedia Group (EXPE), the leading global online travel company, was also a top contributor to SMID Moat Index performance in August, with the catalyst being an announcement of a partnership with a leading cloud provider to enhance its booking platform’s capabilities. Over the past two decades, Expedia has built a strong network of properties (the supply side of the network effect equation), which has driven strong end-user traffic and bookings (demand side of the network effect equation). After reviewing second-quarter results, Morningstar has increased their fair value estimate from $207 to $222 to reflect higher sales in 2025. Nevertheless, this should not be taken as a recommendation to buy, and investors should be mindful that estimates may not prove accurate and should consider all relevant factors.
Companies detracting the most in August from the SMID Moat Index included two names from industrials, with CNH Industrial (CNH) and critical digital infrastructure provider Vertiv Holdings (VRT) weighing on performance during the month. Other notable laggards were semiconductor company Marvell Technology (MVRL), MarketAxess Holdings (MKTX), and real estate investment trust SBA Communications (SBAC).
SMID Moat Index Top Contributors and Detractors - August 2025
Contributors
| Company | Ticker | Sector | Avg. Weight (%) | Contribution (%) |
| Wynn Resorts Ltd | WYNN | Consumer Discretionary | 1.64 | 0.27 |
| Expedia Group Inc | EXPE | Consumer Discretionary | 1.37 | 0.27 |
| BorgWarner Inc | BWA | Consumer Discretionary | 1.55 | 0.25 |
| Monolithic Power Systems Inc | MPWR | Technology | 1.42 | 0.25 |
| Lithia Motors Inc Class A | LAD | Consumer Discretionary | 1.19 | 0.20 |
Detractors
| Company | Ticker | Sector | Avg. Weight (%) | Contribution (%) |
| Marvell Technology Inc | MVRL | Technology | 0.76 | -0.16 |
| CNH Industrial NV | CNH | Industrials | 1.30 | -0.15 |
| Vertiv Holdings Co Class A | VRT | Industrials | 1.13 | -0.14 |
| MarketAxess Holdings Inc | MKTX | Financials | 1.23 | -0.13 |
| SBA Communications Corp Class A | SBAC | Real Estate | 1.32 | -0.11 |
Source: Morningstar. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein.
Choose Your Moat Strategy
VanEck’s suite of moat investing strategies is powered by Morningstar’s equity research team, which seeks quality companies trading at attractive valuations. The below ETFs offer access to moat companies across market segments:
VanEck Morningstar US Wide Moat UCITS ETF (MOTU): Seeks exposure to US companies considered by Morningstar’s equity analysts to have durable competitive advantages and appealing valuations.
VanEck Morningstar US ESG Wide Moat UCITS ETF (MOAT): Invests in potentially attractively priced, ESG-filtered US companies identified for sustainable competitive advantages by Morningstar. ESG Screens include exclusion of companies deriving revenues from Controversial Weapons, Civilian Firearms and Thermal Coal as defined by Sustainalytics as well as companies with higher levels of ESG-related risks according to Sustainalytics Estimates. Applying ESG Screens might also cause the investment universe to be limited in size, and the ETF may perform differently compared to non-screened portfolios. Investors should check all the characteristics of the fund before making any investment decision. Relevant disclosures can be found on fund page as well as under this link.
VanEck Morningstar US SMID Moat UCITS ETF (SMOT): Focuses on potentially undervalued US small- and mid-cap companies identified for their possible durable competitive advantages.
VanEck Morningstar Global Wide Moat UCITS ETF (GOAT): Targets high-quality global companies with wide economic moats and potential for long-term growth according to Morningstar.
The ETFs mentioned involve several risks. These include stock market risk (the value of your investment can go up or down), concentration risk (the ETFs may focus on certain sectors or companies and invest in fewer securities than those tracking plain benchmarks), and currency risk (returns can be affected by exchange rate changes).
Additional risks include valuation risk (companies that seem cheap may not perform well), smaller company risk (as smaller firms can be more volatile. Because the ETFs use equal weighting, each company has the same impact on performance, which may lead to different results compared to market-cap-weighted benchmarks. There’s also a chance the ETF doesn’t fully match its index performance (tracking error).
For further information on risks and other important information, please refer to the KID/KIID and the Prospectus of the funds, available at www.vaneck.com before investing.
To receive more Moat Investing insights, sign up to our newsletter.
The source for all performance data points, contributions, and company research is Morningstar Direct, as of 31/08/2025.
IMPORTANT INFORMATION
This is marketing communication. Please refer to the prospectus of the UCITS and to the KID/KIID before making any final investment decisions. These documents are available in English and the KIDs/KIIDs in local languages and can be obtained free of charge at www.vaneck.com, from VanEck Asset Management B.V. (the “Management Company”) or, where applicable, from the relevant appointed facility agent for your country.
For investors in Switzerland: VanEck Switzerland AG, with registered office in Genferstrasse 21, 8002 Zurich, Switzerland, has been appointed as distributor of VanEck´s products in Switzerland by the Management Company. A copy of the latest prospectus, the Articles, the Key Information Document, the annual report and semi-annual report can be found on our website www.vaneck.com or can be obtained free of charge from the representative in Switzerland: Zeidler Regulatory Services (Switzerland) AG, Stadthausstrasse 14, CH-8400 Winterthur, Switzerland. Swiss paying agent: Helvetische Bank AG, Seefeldstrasse 215, CH-8008 Zürich.
For investors in the UK: This is a marketing communication targeted to FCA regulated financial intermediaries. Retail clients should not rely on any of the information provided and should seek assistance from a financial intermediary for all investment guidance and advice. VanEck Securities UK Limited (FRN: 1002854) is an Appointed Representative of Sturgeon Ventures LLP (FRN: 452811), which is authorised and regulated by the Financial Conduct Authority (FCA) in the UK, to distribute VanEck´s products to FCA regulated firms such as financial intermediaries and Wealth Managers.
This information originates from VanEck (Europe) GmbH, which is authorized as an EEA investment firm under MiFID under the Markets in Financial Instruments Directive (“MiFiD). VanEck (Europe) GmbH has its registered address at Kreuznacher Str. 30, 60486 Frankfurt, Germany, and has been appointed as distributor of VanEck products in Europe by the Management Company. The Management Company is incorporated under Dutch law and registered with the Dutch Authority for the Financial Markets (AFM).
This material is only intended for general and preliminary information 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 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. Information provided by third party sources is believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed.
VanEck Morningstar US SMID Moat UCITS ETF (the "ETF") is a sub-fund of VanEck UCITS ETFs plc, an open-ended variable capital umbrella investment company with limited liability between sub-funds. The ETF is registered with the Central Bank of Ireland, passively managed and tracks an equity index. The product described herein aligns to Article 6 Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector. Information on sustainability-related aspects pursuant to that regulation can be found on www.vaneck.com. Investors must consider all the fund's characteristics or objectives as detailed in the prospectus or related documents before making an investment decision.
The indicative net asset value (iNAV) of the UCITS is available on Bloomberg. For details on the regulated markets where the ETF is listed, please refer to the Trading Information section on the ETF page at www.vaneck.com. Investing in the ETF should be interpreted as acquiring shares of the ETF and not the underlying assets.
VanEck Morningstar US Wide Moat UCITS ETF (the "ETF") is a sub-fund of VanEck UCITS ETFs plc, an open-ended variable capital umbrella investment company with limited liability between sub-funds. The ETF is registered with the Central Bank of Ireland, passively managed and tracks an equity index. The product described herein aligns to Article 6 Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector. Information on sustainability-related aspects pursuant to that regulation can be found on www.vaneck.com. Investors must consider all the fund's characteristics or objectives as detailed in the prospectus or related documents before making an investment decision.
The indicative net asset value (iNAV) of the UCITS is available on Bloomberg. For details on the regulated markets where the ETF is listed, please refer to the Trading Information section on the ETF page at www.vaneck.com. Investing in the ETF should be interpreted as acquiring shares of the ETF and not the underlying assets.
VanEck Morningstar Global Wide Moat UCITS ETF (the "ETF") is a sub-fund of VanEck UCITS ETFs plc, an open-ended variable capital umbrella investment company with limited liability between sub-funds. The ETF is registered with the Central Bank of Ireland, passively managed and tracks an equity index. The product described herein aligns to Article 6 Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector. Information on sustainability-related aspects pursuant to that regulation can be found on www.vaneck.com. Investors must consider all the fund's characteristics or objectives as detailed in the prospectus or related documents before making an investment decision.
The indicative net asset value (iNAV) of the UCITS is available on Bloomberg. For details on the regulated markets where the ETF is listed, please refer to the Trading Information section on the ETF page at www.vaneck.com. Investing in the ETF should be interpreted as acquiring shares of the ETF and not the underlying assets.
VanEck Morningstar US ESG Wide Moat UCITS ETF (the "ETF") is a sub-fund of VanEck UCITS ETFs plc, an open-ended variable capital umbrella investment company with limited liability between sub-funds. The ETF is registered with the Central Bank of Ireland, passively managed and tracks an equity index. The product described herein aligns to Article 8 Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector. Information on sustainability-related aspects pursuant to that regulation can be found on www.vaneck.com. Investors must consider all the fund's characteristics or objectives as detailed in the prospectus, in the sustainability-related disclosures or related documents before making an investment decision.
The indicative net asset value (iNAV) of the UCITS is available on Bloomberg. For details on the regulated markets where the ETF is listed, please refer to the Trading Information section on the ETF page at www.vaneck.com. Investing in the ETF should be interpreted as acquiring shares of the ETF and not the underlying assets.
Morningstar® US Small-Mid Cap Moat Focus IndexSMare service marks of Morningstar, Inc. and have been licensed for use for certain purposes by VanEck. VanEck’s ETF is not sponsored, endorsed, sold or promoted by Morningstar, and Morningstar makes no representation regarding the advisability of investing in the ETF. It is not possible to invest directly in an index.
The Morningstar® Wide Moat Focus IndexSMare service marks of Morningstar, Inc. and have been licensed for use for certain purposes by VanEck. VanEck’s ETF is not sponsored, endorsed, sold or promoted by Morningstar, and Morningstar makes no representation regarding the advisability of investing in the ETF. It is not possible to invest directly in an index.
The Morningstar® Global Wide Moat Focus IndexSMwas created and is maintained by Morningstar, Inc. Morningstar, Inc. does not sponsor, endorse, issue, sell, or promote the VanEck’s ETF and bears no liability with respect to that ETF or any security. Morningstar is a registered trademark of Morningstar, Inc. Morningstar Global Wide Moat Focus Index is a service mark of Morningstar, Inc. It is not possible to invest directly in an index.
Morningstar® US Sustainability Moat Focus Index is a trade mark of Morningstar Inc. and has been licensed for use for certain purposes by VanEck. VanEck’s ETF is not sponsored, endorsed, sold or promoted by Morningstar and Morningstar makes no representation regarding the advisability in VanEck’s ETF. Effective December 15, 2023 the carbon risk rating screen was removed from the Index. Effective December 17, 2021 the Morningstar® Wide Moat Focus IndexTMhas been replaced with the Morningstar® US Sustainability Moat Focus Index. Effective June 20, 2016, Morningstar implemented several changes to the Morningstar Wide Moat Focus Index 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. It is not possible to invest directly in an index.
The S&P 500 Index (“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 © 2020 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. It is not possible to invest directly in an index.
Investing is subject to risk, including the possible loss of principal. Investors must buy and sell units of the UCITS on the secondary market via an intermediary (e.g. a broker) and cannot usually be sold directly back to the UCITS. Brokerage fees may incur. The buying price may exceed, or the selling price may be lower than the current net asset value. The Management Company may terminate the marketing of the UCITS in one or more jurisdictions. The summary of the investor rights is available in English at: complaints-procedure.pdf (vaneck.com). For any unfamiliar technical terms, please refer to ETF Glossary | VanEck.
No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of VanEck.
© VanEck (Europe) GmbH ©VanEck Switzerland AG © VanEck Securities UK Limited
Important Disclosure
This is a marketing communication. Please refer to the prospectus of the UCITS and to the KID before making any final investment decisions.
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, VanEck Switzerland AG, VanEck Securities UK Limited and their 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 is believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. Brokerage or transaction fees may apply.
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, passively managed and tracks an equity index. Investing in the ETF should be interpreted as acquiring shares of the ETF and not the underlying assets. Investors must read the sales prospectus and key investor information before investing in a fund. These are available in English and the KIIDs/KIDs in certain other languages as applicable and can be obtained free of charge at www.vaneck.com, from the Management Company or from the following local information agents:
UK - Facilities Agent: Computershare Investor Services PLC
Austria - Facility Agent: Erste Bank der oesterreichischen Sparkassen AG
Germany - Facility Agent: VanEck (Europe) GmbH
Spain - Facility Agent: VanEck (Europe) GmbH
Sweden - Paying Agent: Skandinaviska Enskilda Banken AB (publ)
France - Facility Agent: VanEck (Europe) GmbH
Portugal - Paying Agent: BEST – Banco Eletrónico de Serviço Total, S.A.
Luxembourg - Facility Agent: VanEck (Europe) GmbH
Morningstar® US Sustainability Moat Focus Index is a trade mark 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.
Effective December 17, 2021 the Morningstar® Wide Moat Focus IndexTM has been replaced with the Morningstar® US Sustainability Moat Focus Index.
Effective June 20, 2016, Morningstar implemented several changes to the Morningstar Wide Moat Focus Index 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.
It is not possible to invest directly in an index.
All performance information is based on historical data and does not predict future returns. Investing is subject to risk, including the possible loss of principal.
No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of VanEck.
© VanEck (Europe) GmbH / VanEck Asset Management B.V.
