Moats Under Pressure: Lessons from Past Recoveries
May 21, 2026
Read Time 9 MIN
Key Takeaways:
- The Moat Index outperformed through February before a sharp March–May selloff erased its lead.
- Nike, Zoetis, Clorox, Estée Lauder, and GE HealthCare drove most of the underperformance.
- Despite recent weakness, all five companies retain Morningstar wide economic moat ratings.
- Following prior periods of underperformance, the Moat Index historically rebounded within 1–2 years.
- The Moat Index now trades at a 22% discount to fair value vs S&P 500 indexes.
Index performance is not illustrative of fund performance. It is not possible to invest directly in an index. Index returns do not reflect management fees, transaction costs, expenses or taxes, which would reduce returns.
YTD Performance: A Tale of Two Halves
Through the end of February 2026, the Morningstar Wide Moat Focus Index (the "Moat Index") was outperforming the S&P 500 Index. The Moat Index gained 3.38% through February while the S&P 500 was mostly flat for the year (+0.68%), a gap that reflected the kind of quality-at-a-discount positioning the moat strategy is designed to deliver. Then March arrived and the picture reversed.
From March 1 through May 15, 2026, the Moat Index declined approximately -7.06%, while the S&P 500 Index gained 7.96%, a relative gap of 15 percentage points in a matter of weeks. Notably, the S&P 500 Equal Weighted Index also posted negative returns in that period (-1.24%) after leading the market capitalization-weighted S&P 500 Index for the first four months of 2026, it now sits about 3.0% behind.
With the Moat Index in negative territory for 2026 while both the S&P 500 Index and S&P 500 Equal Weighted Index remain positive, this has been among the more disappointing stretches in recent memory. However, the recent weakness reflects a concentrated and rapid selloff driven by specific holdings and sector dynamics, rather than broad deterioration across the portfolio. Through February, the strategy was outperforming, and similar periods of sharp relative underperformance have historically been followed by recovery.
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-3.92% Moat Index YTD |
+8.70% S&P 500 Index YTD |
+5.74% S&P 500 Equal Weighted Index YTD |
Source: Morningstar. Data as of 5/15/2026. 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. Fund performance current to the most recent month end is available by visiting vaneck.com or by calling 800.826.2333.
Wide Moat Companies Behind the Drawdown
Stock selection, not just sector positioning, has been the primary culprit behind the year-to-date gap. A concentrated group of wide-moat companies experienced sharp price declines since March 1, 2026, and their meaningful weights in the index led to outsized negative contributions. Notably, each of these companies retain wide economic moat ratings from Morningstar, and in several cases the recent price weakness has made them more compelling from a valuation standpoint, in Morningstar’s view.
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ZTS Return: -43.14% |
Zoetis’ price declined following a weak first quarter earnings showing, leading Morningstar to reduce the company’s fair value estimate to $140 per share from $158. In Morningstar’s view, Zoetis’ leading position in animal health, supported by patent and brand intangible assets from dominant market share across companion animal and livestock product keeps its wide economic moat intact. |
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CLX Return: -27.96% |
Following outsize demand at the outset of the pandemic, Clorox has faced supply chain malaise, rampant inflation, and, in 2023, a cybersecurity breach that forced it to take some information technology systems (including ordering) offline. Still, Clorox has continued to execute its strategic playbook, and its eclectic brand mix and entrenched position with leading retailers support its wide moat rating, according to Morningstar. |
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NKE Return: -32.19% |
Nike has struggled recently with lackluster product development, soft demand for sportswear, and strained relationships with wholesale accounts, as well as ongoing pressure in China. However, Morningstar continues to view Nike’s intangible brand asset as the leader in athletic apparel and premium pricing power as justification for its wide moat rating. Morningstar also believes Nike’s renewed focus on key partners, products, and international athletics positions the company for longer-term growth, including in China as investment in athletics and consumer wealth expand. |
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EL Return: -26.66% |
Estée Lauder has faced continued pressure from slowing demand in China as well as competitive and macro headwinds. Morningstar believes its category-leading brands in skin care, cosmetics and fragrances, combined with scale-based cost advantages, continue to support its wide moat rating. While Estée Lauder’s premium-focused approach leaves the company more exposed to macro cyclicality vs. peers, Morningstar remains impressed by the company’s ability to grow share in China through product innovation and high-touch consumer engagement. Morningstar also views recent results as evidence that cost savings initiatives, new product investments, and expanded distribution are beginning to gain traction. |
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GEHC Return: -27.86% |
GE HealthCare faced pressure following first quarter results. This prompted Morningstar to lower its fair value estimate to $88 per share from $98, due to expectations for more limited margin improvement over the next three years amid macroeconomic and geopolitical factors beyond the company’s control. Morningstar continues to view GEHC’S leadership in the medical imaging market, extensive servicing networks and integration within hospital workflows as creating intangible assets and switching cost attributes that support its wide moat rating. |
Please see below for fund concentrations of the companies referenced herein.
Source: Morningstar. Returns from 3/1/2026 to 5/15/2026. Past performance is no guarantee of future results. Not a recommendation to buy or sell any individual security. Please see index definitions and other important disclosures at the end of this content. Fund performance current to the most recent month end is available by visiting vaneck.com or by calling 800.826.2333.
Putting Recent Moat Index Performance in Historical Context
The Moat Index has experienced concentrated periods of underperformance before, followed by multi-year recoveries, rewarding investors who remained patient. Two prior episodes are particularly instructive.
2014–2015: The Moat Index lagged the S&P 500 Index by roughly 4% in 2014 and 6% in 2015. The Moat Index’s valuation-driven stock selection and energy exposure weighed on returns. The Index subsequently rebounded, posting excess returns relative to the S&P 500 Index in each of the following four calendar years (2016-2019).
2020–2021: A similar dynamic played out during the global pandemic era. The Index underperformed the S&P 500 Index in both years as growth and speculative assets dominated. In 2022, the Index held up significantly better in the bear market, declining only 13% versus the S&P 500 Index’s 18% drop. Then in 2023, the Index surged 32%, outperforming by over 6 percentage points.
The pattern is consistent with historical evidence on moat investing: mean reversion tends to favor disciplined approaches when valuations become stretched in one direction. The chart below shows relative returns across both cycles, extending into 2026 and 2027 where the outcome remains, of course, unknown.
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Moat Index Excess Returns vs. S&P 500 Index
Source: Morningstar. Data as of 5/15/2026. 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. Fund performance current to the most recent month end is available by visiting vaneck.com or by calling 800.826.2333.
Understanding Moat Index’s Current Exposure
One could argue that the Moat Index’s risk/reward and holdings exposure may look more comparable to the S&P 500 Equal Weighted Index than the cap-weighted S&P 500. Comparing similar past cycles of Moat Index returns to the S&P Equal Weighted Index provides additional, meaningful context. The Moat Index provided similar years of excess returns and recent “underperformance” was muted in 2024 and has only been noteworthy in 2026.
Moat Index Excess Returns vs. S&P 500 Equal Weighted Index
Source: Morningstar. Data as of 5/15/2026. 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. Fund performance current to the most recent month end is available by visiting vaneck.com or by calling 800.826.2333.
The Case for Patient Optimism
Perhaps the most compelling reason to remain constructive on moat investing is where valuations stand today. A look at Morningstar's price-to-fair value ratio, which measures the aggregate price of each index's holdings relative to Morningstar's analyst-derived intrinsic value estimates, highlights the valuation disconnect that has emerged.
| Index | Price / Fair Value | Interpretation |
| Morningstar Wide Moat Focus Index | 0.78 | 22% discount to fair value |
| S&P 500 Index | 1.00 | At fair value |
| S&P 500 Equal Weighted Index | 0.99 | Near fair value |
Source: Morningstar. Data as of 5/15/2026. 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. Fund performance current to the most recent month end is available by visiting vaneck.com or by calling 800.826.2333.
The Moat Index trades at a 22% discount to the aggregate fair value of its holdings, while both S&P 500 indexes sit essentially at fair value. When high-quality, wide-moat businesses decline sharply without a corresponding deterioration in their competitive positions or long-term earnings power, they tend to become more attractive, not less.
The Morningstar Wide Moat Focus Index is built on a disciplined, systematic process: Morningstar's equity analysts identify companies with wide economic moats and the Index targets those trading at the most attractive valuations within that universe. Following the sell-off of recent months, the Index's portfolio now include wide moat companies trading at meaningful discounts to Morningstar’s fair value estimates.
Periods like this test conviction. But wide economic moats don't erode in a matter of weeks. The fundamentals that earned Nike, Zoetis, Clorox, Estée Lauder, and GE HealthCare their wide moat designations remain intact. What has changed is price and investor sentiment, not the competitive advantages and long-term earnings power that underpin these businesses. History suggests patience has mattered most in periods like this.
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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.
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Important Disclosures
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets mentioned is unknown. 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. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
Holdings will vary for the funds and their corresponding benchmark indices. For a complete list of holdings in the ETF, please click here: MOAT ETF and VanEck Morningstar Wide Moat Fund - Class Z.
Holdings as of 5/15/2026
| Ticker | Company | MOAT % AUM |
MWMZX % AUM |
| CLX | Clorox | 2.26 | 2.26 |
| EL | Estée Lauder | 2.12 | 2.13 |
| GEHC | GE HealthCare | 1.99 | 2.00 |
| NKE | Nike | 1.85 | 1.85 |
| ZTS | Zoetis | 1.66 | 1.67 |
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. Past performance is no guarantee of future results.
An investor cannot invest directly in an index. Returns reflect past performance and do not guarantee future results. Results reflect the reinvestment of dividends and capital gains, if any. Certain indices may take into account withholding taxes. Index returns do not represent Fund returns. The Index does not charge management fees or brokerage expenses, nor does the Index lend securities, and no revenues from securities lending were added to the performance shown.
The Morningstar moat-driven indexes represent various regional exposures and consist of companies identified as having sustainable, competitive advantages and whose stocks are attractively priced, according to Morningstar.
The S&P 500 Index consists of 500 widely held common stocks covering the leading industries of the U.S. economy.
The S&P 500® 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 © 2026 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.
Price-to-fair value represents the trading price of a stock or group of stocks relative to their Morningstar-assigned fair value estimate.
The Morningstar® Wide Moat Focus IndexSM was created and is maintained by Morningstar, Inc. Morningstar, Inc. does not sponsor, endorse, issue, sell, or promote the VanEck Morningstar Wide Moat ETF or VanEck Morningstar Wide Moat Fund and bears no liability with respect to the funds or any security. Morningstar® is a registered trademark of Morningstar, Inc. Morningstar® Wide Moat Focus IndexSM is a service mark of Morningstar, Inc.
The Morningstar® Wide Moat Focus IndexSM Intended to track the overall performance of attractively priced companies with sustainable competitive advantages according to Morningstar's equity research team.
An investment in the VanEck Morningstar Wide Moat ETF (MOAT®) may be subject to risks which include, among others, risks related to investing in equity securities, health care sector, consumer staples sector, industrials sector, information technology sector, financials sector, medium-capitalization companies, market, operational, high portfolio turnover, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount and liquidity of fund shares, non-diversification, index-related concentration and competitive advantage assessment risks, all of which may adversely affect the Fund. Medium-capitalization companies may be subject to elevated risks.
You can lose money by investing in the VanEck Morningstar Wide Moat Fund. Any investment in the Fund should be part of an overall investment program rather than a complete program. The Fund is subject to risks which may include, but are not limited to, risks related to consumer staples sector, competitive advantage assessment, equity securities, financials sector, health care sector, high portfolio turnover, index tracking, industrials sector, industry concentration, information technology sector, market, medium-capitalization companies, non-diversification, operational, passive management, and underlying fund investments risk, all of which may adversely affect the Fund. Medium-capitalization companies may be subject to elevated risks. The Fund's assets may be concentrated in a particular sector and may be subject to more risk than investments in a diverse group of sectors.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
© Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.
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Important Disclosures
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets mentioned is unknown. 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. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
Holdings will vary for the funds and their corresponding benchmark indices. For a complete list of holdings in the ETF, please click here: MOAT ETF and VanEck Morningstar Wide Moat Fund - Class Z.
Holdings as of 5/15/2026
| Ticker | Company | MOAT % AUM |
MWMZX % AUM |
| CLX | Clorox | 2.26 | 2.26 |
| EL | Estée Lauder | 2.12 | 2.13 |
| GEHC | GE HealthCare | 1.99 | 2.00 |
| NKE | Nike | 1.85 | 1.85 |
| ZTS | Zoetis | 1.66 | 1.67 |
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. Past performance is no guarantee of future results.
An investor cannot invest directly in an index. Returns reflect past performance and do not guarantee future results. Results reflect the reinvestment of dividends and capital gains, if any. Certain indices may take into account withholding taxes. Index returns do not represent Fund returns. The Index does not charge management fees or brokerage expenses, nor does the Index lend securities, and no revenues from securities lending were added to the performance shown.
The Morningstar moat-driven indexes represent various regional exposures and consist of companies identified as having sustainable, competitive advantages and whose stocks are attractively priced, according to Morningstar.
The S&P 500 Index consists of 500 widely held common stocks covering the leading industries of the U.S. economy.
The S&P 500® 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 © 2026 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.
Price-to-fair value represents the trading price of a stock or group of stocks relative to their Morningstar-assigned fair value estimate.
The Morningstar® Wide Moat Focus IndexSM was created and is maintained by Morningstar, Inc. Morningstar, Inc. does not sponsor, endorse, issue, sell, or promote the VanEck Morningstar Wide Moat ETF or VanEck Morningstar Wide Moat Fund and bears no liability with respect to the funds or any security. Morningstar® is a registered trademark of Morningstar, Inc. Morningstar® Wide Moat Focus IndexSM is a service mark of Morningstar, Inc.
The Morningstar® Wide Moat Focus IndexSM Intended to track the overall performance of attractively priced companies with sustainable competitive advantages according to Morningstar's equity research team.
An investment in the VanEck Morningstar Wide Moat ETF (MOAT®) may be subject to risks which include, among others, risks related to investing in equity securities, health care sector, consumer staples sector, industrials sector, information technology sector, financials sector, medium-capitalization companies, market, operational, high portfolio turnover, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount and liquidity of fund shares, non-diversification, index-related concentration and competitive advantage assessment risks, all of which may adversely affect the Fund. Medium-capitalization companies may be subject to elevated risks.
You can lose money by investing in the VanEck Morningstar Wide Moat Fund. Any investment in the Fund should be part of an overall investment program rather than a complete program. The Fund is subject to risks which may include, but are not limited to, risks related to consumer staples sector, competitive advantage assessment, equity securities, financials sector, health care sector, high portfolio turnover, index tracking, industrials sector, industry concentration, information technology sector, market, medium-capitalization companies, non-diversification, operational, passive management, and underlying fund investments risk, all of which may adversely affect the Fund. Medium-capitalization companies may be subject to elevated risks. The Fund's assets may be concentrated in a particular sector and may be subject to more risk than investments in a diverse group of sectors.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
© Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.