Pat Finn, Director of Institutional ETF Business Development of Van Eck Global and Michael Holt, Global Head of Equity Research at Morningstar North America joined ETF Trends publisher Tom Lydon at the Morningstar Investment Conference in Chicago to talk about wide moat investing, the Market Vectors Wide Moat ETF (NYSEArca: MOAT) and the Morningstar index MOAT tracks.
“What’s interesting is they have to be wide moat stocks,” said Holt. “That means that they have a durable competitive advantage. This is not how they made money recently or today. Are they going to have excess profits 10 years from now, 20 years from now?”
MOAT frequently makes anywhere from four to nine additions and deletions to its portfolio at each quarterly rebalance. The ETF tracks an index that Morningstar says the index uses the firm’s proprietary methodology to identify companies with long-term, advantages, which allows companies to earn sustainable excess economic profits, as measured by the return on invested capital relative to the company’s cost of capital.
“It’s a cost-efficient way to get the best of Morningstar’s analysts,” added Finn.
Watch the video below to see the full interview.
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