Moat Index Welcomes Back Cheap Mag 7 Names

The Morningstar^® Wide Moat Focus Index^SM (the “Moat Index” or “Index”) underwent its quarterly review on December 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:

• AI Uncertainty Leads to Valuation Opportunities in Magnificent 7 and Others

  Following an uncertain quarter for AI investors, several Mag 7 companies flashed value including NVIDIA (NVDA) and Meta Platforms (META). Microsoft’s positioning was also increased this quarter, but AI darling Alphabet (GOOGL) was removed from the portfolio as a result of its strong relative performance. Other AI-related names added to the portfolio this quarter were the victims of short-term souring market sentiment: Oracle and ServiceNow.

• Another High Turnover Quarter Brings First-Time Entrants

  There were 16 total companies added and removed from the sub-portfolio under review this quarter. This follows a high turnover quarter in September when 17 names were swapped in the Index. Among the additions in December were four companies that are being added to the Moat Index for the first time, some due to moat rating changes and some that are attractively priced for the first time in quite some time: Chipotle, LPL Financial, Motorola Solutions, and Zoetis.

• Value Bias Remains, Though Not as Strong as Recent Periods

  The value style remains a 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. However, the current value style overweight is much smaller than much of 2025 with the addition of growth-oriented tech names this quarter. The Moat Index’s price-to-fair value was reduced from about 0.86 to 0.81 following the review, implying an 19% discount to fair value. This stands in stark contrast to the S&P 500 Index, which is currently near fair value at a 0.98 price-to-fair-value ratio.

4Q 2025 Moat Index Review Results

Moat Index Sector Shifts Following 4Q 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 12/19/2025 unless otherwise noted. Index performance is not illustrative of fund performance. It is not possible to invest directly in an index.

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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.