Same Moat Philosophy, New Styles

April 05, 2024

Watch Time 4:20 MIN

Based on the long-term success of the moat investing strategy, we are offering two new ETFs: MGRO and MVAL. These offer a consistent style exposure, allowing investors to express a view on growth versus value in the U.S. equity markets. Learn how they fit into a portfolio.

Video Transcript

VanEck has offered its flagship VanEck Morningstar Wide Moat ETF since 2012. It trades under the ticker symbol MOAT and offers large blend U.S. equity exposure that's focused on quality companies with wide moats that are also trading at attractive valuations, all as identified by Morningstar's equity research team.

MOAT has had tremendous success and it has attracted investment from all corners of the market. Much of that success and its appeal is driven by the strategy's focus on valuations. This focus on valuations, though, can result in significant shifts in MOAT’s portfolio over time, particularly with style exposure. With the great feedback we've received from MOAT investors, we recognize that many may want to focus on this great proven Morningstar-Moat philosophy with a more consistent style exposure.

We are now thrilled to offer two strategies that do just that. The VanEck Morningstar Wide MOAT Growth ETF, ticker MGRO, and the VanEck Morningstar Wide Moat Value ETF, ticker MVAL, offer exposure to Morningstar's forward-looking equity research, while also allowing investors to express a view on growth versus value in the U.S. equity markets.

How MGRO and MVAL Can Fit into a Portfolio

We believe these style-oriented moat strategies can serve as a core long-term holding in an investor's portfolio.

Like the flagship MOAT strategy, we expect their rules-based, systematic process of identifying quality companies at attractive valuations will benefit these strategies over the long term. But what's top of mind for investors these days is the dominance mega-cap companies have had on the market, particularly on the growth side, where mega-cap tech stocks have driven the majority of equity market returns in recent periods.

MGRO and MVAL will provide exposure to a high conviction, concentrated portfolio that will not add to that mega cap exposure that most investors most likely have across their portfolio already.

Exposures to Expect

MGRO and MVAL will feature concentrated portfolios, typically 35 to 45 attractively priced wide moat companies in either respective style category. The market cap profile we expect from MGRO and MVAL would be large cap U.S. companies and consistent style exposure across growth or value depending on the strategy's focus.

MGRO’s Differentiated Growth Strategy

A major difference between MGRO, the moat growth strategy, and other growth-oriented strategies is the likely under-exposure to mega-cap growth stocks. This is both structural by nature of the index's methodology, but also targeted based on its focus on valuations. As many mega-cap growth stocks have appreciated over the last several years, they are often out of favor from a valuation perspective and are trading in expensive territory. Therefore, the underweight to mega cap companies we would expect on the growth side of this strategy.

From a sector perspective, the portfolio is expected to be dynamic based on its valuation-influenced selections on a quarterly basis. We would expect over and underweights to various sectors at any given time that can shift from quarter to quarter.

In sum, I would expect a highly concentrated, high conviction portfolio that is truly differentiated from most value and growth portfolios in the market.

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IMPORTANT DISCLOSURE

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 or industries mentioned are 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.

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, consumer discretionary sector, health care 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 risk and liquidity of fund shares, non-diversification and index-related concentration risks, all of which may adversely affect the Fund. Medium-capitalization companies may be subject to elevated risks.

An investment in the VanEck Morningstar Wide Moat Value ETF (MVAL) may be subject to risks which include, among others, risks related to investing in equity securities, value style investing, financials sector, health care sector, industrials sector, large- and medium-capitalization companies, market, operational, 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. Large- and medium-capitalization companies may be subject to elevated risks. The Fund’s value strategy may result in the Fund investing in securities or industry sectors that underperform the market as a whole. Furthermore, the value companies identified by the Index provider may not operate as expected, and there is no guarantee that the index provider’s proprietary valuation model will perform as intended.

An investment in the VanEck Morningstar Wide Moat Growth ETF (MGRO) may be subject to risks which include, among others, risks related to investing in equity securities, growth style investing, consumer discretionary sector, industrials sector, financials sector, large- and medium-capitalization companies, health care sector, information technology sector, market, operational, 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 risk, all of which may adversely affect the Fund. Large- and medium-capitalization companies may be subject to elevated risks. The Fund’s growth strategy may result in the Fund investing in securities or industry sectors that underperform the market as a whole. Furthermore, the growth companies identified by the Index provider may not operate as expected, and there is no guarantee that the index provider’s proprietary valuation model will perform as intended.

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.

No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of Van Eck Securities Corporation.

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