SMOT ETF Quarterly Reconstitution 3Q2023
September 27, 2023
Read Time 2 MIN
The Morningstar® US Small-Mid Cap Moat Focus IndexSM (the “SMID Moat Index”) underwent its quarterly review on September 15, 2023 in which it systematically targets attractively priced, high quality small- and mid-cap U.S. companies. Below are some key takeaways from the September review and how the SMID Moat Index is positioned as we enter the last quarter of the year. The full review results are available here: 3Q2023 Index Reconstitution
Key Takeaways:
- Technology Companies Lead in Removals
The Index removed a notable number of technology companies during this quarter’s review. In all, seven technology names were removed, including Crane NXT, Blackbaud, Guidewire Software, Monolithic Power Systems, Verisign, and WorkDay. Almost all of these removals were due to the Index’s valuation screen, signaling that this segment of the U.S. market may be overvalued.
- Value Exposure Decreased in Favor of Growth
Despite the SMID Moat Index’s removal of several technology companies, the style exposure within the Index still shifted slightly toward growth this quarter. The shift came primarily at the cost value which saw a reduction in exposure this quarter. Total growth exposure for the Index now stands at about 26%, but remains a minor underweight of about 3% relative to the broad SMID-cap universe1.
- Consumer Discretionary and Health Care Additions
Companies belonging to the consumer discretionary and health care sectors were notable additions this quarter with twelve names between the two sectors added to the Index. DoorDash, Harley-Davidson and Wynn Resorts, among others accounted for the consumer discretionary additions, while health care saw names added like Veeva Systems, DaVita, and Agilent Technologies cycle. Both sectors are overweights in the SMID Moat Index relative to the broad SMID-cap universe1.
Access Quality Companies and Attractive Valuations
VanEck Morningstar SMID Moat ETF (SMOT) seeks to track as closely as possible, before fees and expenses the price and yield performance of the Morningstar US Small-Mid Cap Moat Focus Index.
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Important Disclosures
1 Broad SMID-cap Universe represented by the Morningstar US Small–Mid Cap Index which consists of US stocks representing the bottom 27 percent capitalization of the investable universe.
Source for all data unless otherwise note: Morningstar.
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 SMOT ETF and its corresponding Index. For a complete list of holdings in the ETF, please click here: https://www.vaneck.com/etf/equity/smot/holdings/.
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® US Small-Mid Cap Moat Focus IndexSM was created and is maintained by Morningstar, Inc. Morningstar, Inc. does not sponsor, endorse, issue, sell, or promote the VanEck Morningstar SMID Moat ETF and bears no liability with respect to that ETF or any security. Morningstar® is a registered trademark of Morningstar, Inc. Morningstar® US Small-Mid Cap Moat Focus IndexSM is a service mark of Morningstar, Inc.
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 Morningstar® US Small-Mid Cap Moat Focus IndexSM Intended to track the overall performance of attractively priced US small- and mid-cap companies with sustainable competitive advantages according to Morningstar's equity research team.
An investment in the Fund may be subject to risks which include, among others, risks related to investing in equity securities, small- and medium-capitalization companies, consumer discretionary sector, financials sector, health care sector, industrials sector, information technology sector, market, operational, high portfolio turnover, index tracking, authorized participant concentration, new fund, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount and liquidity of fund shares, non-diversified, and index-related concentration risks, all of which may adversely affect the Fund. Small- and medium-capitalization companies may be subject to elevated risks.
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.
Related Funds
Important Disclosures
1 Broad SMID-cap Universe represented by the Morningstar US Small–Mid Cap Index which consists of US stocks representing the bottom 27 percent capitalization of the investable universe.
Source for all data unless otherwise note: Morningstar.
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 SMOT ETF and its corresponding Index. For a complete list of holdings in the ETF, please click here: https://www.vaneck.com/etf/equity/smot/holdings/.
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® US Small-Mid Cap Moat Focus IndexSM was created and is maintained by Morningstar, Inc. Morningstar, Inc. does not sponsor, endorse, issue, sell, or promote the VanEck Morningstar SMID Moat ETF and bears no liability with respect to that ETF or any security. Morningstar® is a registered trademark of Morningstar, Inc. Morningstar® US Small-Mid Cap Moat Focus IndexSM is a service mark of Morningstar, Inc.
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 Morningstar® US Small-Mid Cap Moat Focus IndexSM Intended to track the overall performance of attractively priced US small- and mid-cap companies with sustainable competitive advantages according to Morningstar's equity research team.
An investment in the Fund may be subject to risks which include, among others, risks related to investing in equity securities, small- and medium-capitalization companies, consumer discretionary sector, financials sector, health care sector, industrials sector, information technology sector, market, operational, high portfolio turnover, index tracking, authorized participant concentration, new fund, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount and liquidity of fund shares, non-diversified, and index-related concentration risks, all of which may adversely affect the Fund. Small- and medium-capitalization companies may be subject to elevated risks.
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.