Key Takeaways:

• The S&P 500 declined 0.95% as market leadership rotated away from mega-cap tech.
• The Moat Index gained 0.29% as its equal-weighted construction benefitted from the broadening rally.
• Applied Materials and Entegris led Moat Index gains on AI-driven semiconductor equipment demand.
• The SMID Moat Index rose 1.94%, with Marvell and a Bio-Techne acquisition announcement driving gains.

Index performance is not illustrative of fund performance. It is not possible to invest directly in an index. Past performance is no guarantee of future results.

Fair value estimates and price targets referenced herein are those of Morningstar's equity research team, are subject to change without notice, and do not constitute recommendations or investment advice.

U.S. equities turned choppy in June as market leadership rotated away from the mega-cap technology names that had carried the market to record highs. The S&P 500 declined 0.95%, weighed down by its largest constituents, even as the average stock gained and the S&P 500 Equal Weight Index rose 2.38%, a wide gap that signaled broadening participation. An early-month selloff in semiconductor and AI-related shares set the tone, and the Nasdaq Composite fell 2.75%. Sentiment shifted again at the June 17 Federal Reserve meeting, the first led by new Chair Kevin Warsh, where policymakers held rates steady but raised their inflation projections and signaled little urgency to cut. Industrials and health care led the market, while communication services and energy lagged.

The Morningstar Wide Moat Focus Index (the “Moat Index”) gained 0.29% in June, outperforming the S&P 500 as the market broadened and the mega-cap technology names that the equal-weighted Index holds at far lower concentrations than the benchmark pulled back. After trailing the S&P 500 through a stretch of narrow, technology-led gains in recent months, the Index benefited as leadership rotated toward a wider set of stocks. Sector allocation was the primary driver of the relative gain, while stock selection was a partial offset. For the second quarter, the Index gained 7.65%, trailing the S&P 500’s 15.20% advance in a period whose gains remained concentrated in the largest technology stocks.

The Morningstar US Small-Mid Cap Moat Focus Index (the “SMID Moat Index”) rose 1.94% in June, trailing the S&P MidCap 400’s 3.59% gain and the S&P SmallCap 600’s 7.29% advance in a month when smaller-cap stocks broadly led the market’s rotation. The Index drew its strongest contributions from health care and technology holdings, with additional support from building products and other cyclical names. Its quality focus can lag when lower-quality, higher-beta stocks lead the small-cap market, as they did in June, though its holdings still delivered solid absolute gains. For Q2, the SMID Moat Index gained 10.64%.

Broadening Market Lifts Moat Stocks in June

Source: Morningstar. Data as of 6/30/2026. 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.

Moat Indexes Complete Their Second-Quarter Reviews

Both the Moat and SMID Moat Indexes underwent their quarterly reviews in June, refreshing each portfolio toward the most attractively priced, high-quality companies in their respective universes. Our recent blog, AI Reevaluations Shape Moat Index Turnover, covers key takeaways, and full results are available here for the Moat Index and SMID Moat Index.

Moat Index Highlights: Semis and Cybersecurity Lead a Broadening Market

June was a stronger month for the Moat Index on a relative basis, as the market broadened beyond the mega-cap technology names that had led in recent months. The Index’s equal-weighted construction, which holds those mega-caps at far lower concentrations than the benchmark, provided a tailwind as leadership rotated. Sector allocation was the primary driver of the relative gain, while strong stock selection within technology, led by semiconductor equipment and cybersecurity holdings, was partly offset by weaker selection in other areas of the portfolio.

Semiconductor-related holdings led the Index’s contributors, as investors continued to reward the companies supplying the equipment and materials behind the artificial intelligence buildout, even as some larger chipmakers pulled back. Applied Materials Inc. (AMAT), the largest supplier of wafer-fabrication equipment, advanced roughly 60% after reporting strong quarterly results and raising its growth outlook, with management pointing to accelerating demand tied to leading-edge logic, memory and advanced packaging for AI. Morningstar assigns Applied Materials a wide moat, supported by intangible assets from its industry-leading research budget and by the high switching costs embedded in its equipment and on-site service relationships. Entegris Inc. (ENTG), which supplies purification solutions and specialty materials used throughout chip fabrication, gained approximately 30% on the same AI-driven demand. Morningstar also assigns Entegris a wide moat, reflecting switching costs from its razor-and-blade consumables model and intangible assets in its proprietary purity formulations.

Cybersecurity holdings also contributed meaningfully, extending a theme that has lifted the Index in recent months, as investors increasingly treat security spending as a beneficiary, rather than a casualty, of rising AI adoption. Fortinet Inc. (FTNT) gained roughly 11% after reporting strong quarterly results and raising its full-year sales outlook, with management noting that every new AI deployment widens the corporate attack surface and increases demand for protection. Morningstar views Fortinet’s wide moat as supported by customer switching costs and a network effect that strengthens as more threat data flows across its platform. Palo Alto Networks Inc. (PANW) advanced more than 20%, helped by strong results and broad-based demand across its network, cloud and security-operations platforms. Morningstar assigns Palo Alto a wide moat, underpinned by high switching costs and a reinforcing network effect.

Companies detracting the most from Moat Index performance were also concentrated in technology, though in different corners of the sector than the month’s leaders. Where the Index’s gains came from semiconductor-equipment, materials, and cybersecurity holdings, its detractors were mega-cap platform and chip names that had led the AI trade and gave back ground as leadership rotated. Oracle Corp. (ORCL), a database and cloud-infrastructure provider, was the largest detractor as its shares gave back a portion of their recent AI-driven gains. NXP Semiconductors N.V. (NXPI), a maker of automotive and industrial chips; Microsoft Corp. (MSFT), a software and cloud-computing giant; and Broadcom Inc. (AVGO), a semiconductor and infrastructure-software company, also weighed on results, alongside The Estée Lauder Companies Inc. (EL), a prestige beauty company.

Moat Index Top Contributors and Detractors - June 2026

Contributors

Detractors

Source: Morningstar. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein.

SMID Moat Index Highlights: AI Chips and an Acquisition Drive Gains

The SMID Moat Index posted a solid gain in June, with its strongest contributions coming from health care and technology holdings. A blend of AI-linked semiconductor names and company-specific catalysts, including an acquisition announcement among its health care holdings, supported performance across several sectors.

Marvell Technology Inc. (MRVL) was the top contributor, advancing roughly 45% after the company raised its long-term growth outlook and pointed to accelerating demand for its custom AI silicon and optical-connectivity chips. A repeat contributor in recent months, Marvell has been among the clearest small- and mid-cap beneficiaries of data center and AI infrastructure spending. Morningstar assigns Marvell a narrow moat, supported by intangible assets in networking-chip design and customer switching costs.

Bio-Techne Corp. (TECH), a life-sciences supplier of proteins, reagents and instruments used in biopharmaceutical and academic research, advanced roughly 37% after Merck KGaA agreed to acquire the company, sending its shares sharply higher on the announcement. Morningstar assigns Bio-Techne a narrow moat, supported by intangible assets and switching costs in its protein-sciences business, where proprietary consumables account for the bulk of revenue and its reputation for quality underpins durable pricing power.

Other notable contributors included Acuity Inc. (AYI), a lighting and building-management products company; Humana Inc. (HUM), a health insurer; and Masco Corp. (MAS), a maker of home-improvement and building products.

Companies detracting the most from the SMID Moat Index were split between technology names caught in the month’s rotation and commodity-linked cyclicals. Akamai Technologies Inc. (AKAM), a content-delivery, security and cloud-computing provider, was the largest detractor, giving back a portion of its recent gains as enthusiasm around its pivot toward AI compute cooled. Albemarle Corp. (ALB), a specialty-chemicals and lithium producer, and ON Semiconductor Corp. (ON), a maker of power and automotive chips, also weighed on results, alongside Zoom Communications Inc. (ZM), a communications-software provider, and SLB Ltd. (SLB), an oilfield-services company. The mix reflected soft commodity prices and a rotation away from some of the AI-linked technology names that had led in prior months.

SMID Moat Index Top Contributors and Detractors - June 2026

Contributors

Detractors

Source: Morningstar. Past performance is no guarantee of future results. Index performance is not illustrative of fund performance. Not intended as a recommendation to buy or to sell any of the securities mentioned herein.

Choose Your Moat Strategy

VanEck’s suite of moat investing strategies is powered by Morningstar’s equity research team, which seeks quality companies trading at attractive valuations. The below ETFs offer access to US moat companies:

VanEck Morningstar Wide Moat ETF (MOAT): companies with a wide moat rating, which means Morningstar believes the company is likely to sustain its competitive advantage for at least the next 20 years.

VanEck Morningstar SMID Moat ETF (SMOT): small and mid-cap moat companies.

VanEck Morningstar Wide Moat Value ETF (MVAL): wide moat companies within Morningstar’s value style category.

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