Global Moat Investing Showing Strength in 2022

The Morningstar^® Wide Moat Focus Index^SM (the “Moat Index” or “Index”) remained ahead of the S&P 500 index by nearly 4% in 2022 (-9.13% vs. -12.76%, respectively), as of 5/31/2022, despite trailing the S&P 500 Index ever so slightly in May (-0.01% vs. 0.18%, respectively).

The Moat Index continued to benefit from strong stock selection relative to the S&P 500 Index as opposed to opportunistic sector bets. Stock selection in each month tended to drive excess return throughout 2022 with the exception of March, when stock selection was the primary driver of underperformance.

Thus far in 2022, the Moat Index’s overweight to Corteva (CTVA), Aspen Technology (AZPN), Lockheed Martin (LMT), Polaris (PII) and Western Union (WU) have provided the most contribution to excess return while its overweight to Veeva Systems (VEEV), Equifax (EFX), Boeing (BA), MercadoLibre (MIL) and Tyler Technologies (TYL) have prevented even stronger relative performance.

Strength of Moat Investing Globally

With more than 15 years of live performance history, the Moat Index’s strong performance through periods of market turmoil is well documented. However, many may overlook, or simply be unaware of, the recent stretch of success posted by Morningstar’s global moat-driven indexes.

The Morningstar^® Global ex-US Moat Focus Index^SM (the “International Moat Index”) finished May ahead of the MSCI All Country World Index ex USA (the “ACWI ex USA”) by more than 8% in 2022 (-2.57% vs. -10.74%, respectively). The International Moat Index was launched in 2015 and now has over 7 years of live performance history. Like its U.S. focused counterpart, the International Moat Index has shifted to a value style posture over the years, which has been disruptive to relative returns. The International Moat Index outperformed the ACWI ex USA in 2016, 2017 and 2018 but underperformed in 2019, 2020 and 2021 as global growth stocks took center stage. The International Moat Index’s exposure to moat-rated companies with attractive valuations has positioned it well for the global market turmoil of 2022 and the market’s rotation away from growth to cyclical value-oriented businesses.

The Morningstar^® Global Wide Moat Focus Index^SM (the “Global Moat Index”) is the newest of the suite, but was built using the same time-tested approach of the other moat indexes: target wide moat companies with attractive valuations. The Global Moat Index was launched in April of 2018 and focuses on wide moat valuation opportunities globally. It has also impressed in 2022, posting excess returns relative to the MSCI All Country World Index (the “ACWI”) through May of 5.3% (-7.53% vs -12.83%, respectively). Outside of 2021 when the Global Moat Index underperformed the ACWI, it has outperformed in all calendar year and standard trailing periods.

Global Moat Investing Success

As of 5/31/2022

Source: Morningstar. Index performance is not illustrative of Fund performance. Fund performance current to the most recent month end is available by visiting vaneck.com or by calling 800.826.2333. Past performance is no guarantee of future results. Indexes are unmanaged and are not securities in which an investment can be made.