The Market Vectors Wide Moat ETF (NYSEArca: MOAT) is an ETF built on the principles of investing in companies with noteworthy competitive advantages.
MOAT tries to reflect the performance of the Morningstar Wide Moat Focus Index, which utilizes a “wide moat” investment strategy that hones in on companies with a competitive advantage. Warren Buffett is also well known for his preference for large, established companies with wide economic moats that help outperform the competition. [An ETF Patterned on Warren Buffett’s Wide-Moat Wide Moat Approach]
So it stands to reason that MOAT, which has $505.5 million in assets under management, would be home to a few stocks that Buffett himself would own. As of Dec. 16, MOAT is home to three stocks that are currently held in Berkshire Hathaway’s (NYSE: BRK-A) equity portfolio: Bank of New York Mellon (NYSE: BK) and Dow components Coca-Cola (NYSE: KO) and General Electric (NYSE: GE). MOAT also features a stake in Berkshire’s “B” shares.
As MOAT is essentially an equal-weight ETF, the weights on those stocks within the fund average out to roughly 5% apiece.
Given Buffett’s penchant for finding deep value plays and generating market-beating returns, ambitious investors might have thought at the start of the year that pulling the Berkshire holdings from MOAT would be a better idea than owning the ETF outright. [Wide Moat ETF Soaks up Buffett’s Approach]
That strategy would have led to some decent returns, but it would not have beaten MOAT. In fact, of the four aforementioned stocks, only General Electric outpaced MOAT this year. MOAT is up nearly 25% while GE is up 26.4%.