Moat Index’s Long-term Track Record Persists Despite Blip
February 26, 2021
The Morningstar Wide Moat Focus Index (“Moat Index”) ended its four-year streak of outperforming the broad U.S. equity market (as represented by the Morningstar US Market Index) in 2020—returning 15.1% vs 20.9%, respectively. Despite this, the Moat Index’s long-term track record remains impressive.
A recent Morningstar Equity Research report dissects the Moat Index’s 2020 performance and contextualizes these results as the strategy approaches a 14-year live track record. Topics include:
The compelling long-term track record of the Moat Index over nearly 14 years, including its risk-adjusted return metrics as well as the correlation between holding period length and batting average.1
How the Moat Index approaches FANMAG (Facebook, Amazon, Netflix, Microsoft, Apple, and Google/Alphabet) stocks and why being underweight in 2020 was a primary headwind that led to underperformance relative to the broad market.
The Moat Index’s heavy skew towards value stocks at the expense of growth stocks.
Stock selection as a headwind while sector positioning contributed to performance.
1Batting Average is measured by dividing the number of periods a portfolio or investment strategy outperforms a benchmark by the total number of periods.
Please note that VanEck may offer investments products that invest in the asset class(es) or industries included herein.
The Morningstar® Wide Moat Focus IndexSM consists of U.S. companies identified as having sustainable, competitive advantages and whose stocks are attractively priced, according to Morningstar.
The Morningstar US Market Index is a diversified broad market index that measures the performance of U.S. securities and targets 97% market capitalization coverage of the investable universe.
This is not an offer to buy or sell, or a solicitation of any offer to buy or sell any of the securities/financial instruments mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. 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. The information herein represents the opinion of the author(s), but not necessarily those of VanEck.
All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future results.
Sign-up to Receive Our Latest Insights