Biogen’s FDA Approval Takes Center Stage

By Brandon Rakszawski, Senior ETF Product Manager

The Morningstar Wide Moat Focus Index (the “Moat Index” or “Index”) underperformed the S&P 500® Index in June (1.15% vs. 2.33%, respectively). Despite the modest underperformance, the Index remains ahead of the S&P 500 Index by over 4.5% through this year’s halfway point (19.77% vs. 15.25%, respectively).

Biotech News Dominates Among June’s Leaders

We learned in early June that Biogen (BIIB) received FDA approval for their Alzheimer’s disease treatment, aducanumab. The news sent shares higher and Morningstar quickly raised its fair value estimate for BIIB shares from $350 to $401. This reflected an increased probability of FDA approval (from 40% to 100%) and an expected drug launch of 2024 to 2021, which in turn increased forecasted future cash flows for the biotech firm. It was not all sunshine and rainbows for Biogen in June as Morningstar subsequently lowered its fair value estimate from $401 to $391 per share following disappointing data in ophthalmology gene therapy and depression treatments. Nonetheless, the FDA approval further cemented Morningstar’s conviction around BIIB’s wide moat rating, owing in large part to Biogen’s leading position in Neurology. BIIB lead all Index components in June by a wide margin.

Several tech firms also posted strong returns in June. ServcieNow (NOW), Adobe (ADBE), Guidewire Software (GWRE), and Blackbaud (BLKB) were among the leaders from the sector.

Cyclicals Reset

Following a strong start to 2021, cyclical stocks generally pulled back in June. Financials were broadly represented in the list of companies posting negative returns within the Index in June. More on that in the Index review discussion below.

Beyond financials, two underperforming companies stood out in June: Compass Minerals (CMP) and John Wiley & Sons (JW/A).

Compass Minerals had enjoyed a slow but steady recovery from COVID-19 pandemic lows in early April 2020 to reach stock price levels in May 2021 not seen since late 2018. However, through June, CMP saw its share price sell off to a greater degree than other materials companies did. Despite this price action, Morningstar sees Compass’ wide moat rating as stable and has not adjusted its fair value estimate since a two dollar decrease from $80 to $78 per share in March of 2021. CMP’s cost-advantaged assets related to rock salt and sulfite of potash fertilizer continue to drive its advantage over competition, though Morningstar acknowledges the commodity-sensitive risks associated with investment in the company. At present, CMP trades at nearly a 25% discount to Morningstar’s fair value estimate.

John Wiley & Sons features an impressive portfolio of research and education assets and it has been a member of the Moat Index for the better part of the last three years. Following a stretch of impressive stock price performance, the company was scaled out of the Moat Index in March and June 2021. Despite its stock price pull back in June, which made it the second worst performing company in the Index, Wiley left at a notable premium to Morningstar’s fair value estimate.

June 2021 Morningstar® Wide Moat Focus IndexSM Review

In a reversal of the value rotation of 2020, the Moat Index saw its exposure to financials decrease and tech stocks increase as valuation opportunities began presenting themselves in some areas of the market where there hasn’t been much value to be had in recent years. Growth exposure increased and value decreased leaving growth, value and core style exposure nearly evenly distributed within the Index.

All told, outside of the decrease in financials exposure and increase in technology exposure there were no other dramatic shifts in the Index. View the full index review results here.

Index Additions & Increased Allocations
Company Ticker Price/Fair Value
Polaris Inc. PII 0.73
ServiceNow Inc. NOW 0.78
Facebook Inc. FB 0.86
Tyler Technologies Inc. TYL 0.87
Microsoft Corp MSFT 0.91
Guidewire Software GWRE 0.91
Intercontinental Exchange ICE 0.93
Thermo Fisher Scientific TMO 0.94
Masco Corp MAS 0.95


Index Deletions & Decreased Allocations
Failed Screen
Company Ticker Moat Rating Price/Fair Value Other
Bank of America Corp BAC x
Charles Schwab Corp SCHW x
John Wiley & Sons Inc. JW/A x
Northrop Grumman Corp NOC x
Raytheon Technologies RTX x
The Bank of New York BK x
US Bancorp USB x
Yum! Brands Inc. YUM x


Source: Morningstar. Price/fair value data as of June 8, 2021. Past performance is no guarantee of future results. For illustrative purposes only.

VanEck Vectors Morningstar Wide ETF (MOAT) seeks to replicate as closely as possible, before fees and expenses the price and yield performance of the Morningstar Wide Moat Focus Index.

Originally published by VanEck, 7/9/21

Important Disclosures

The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. 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. The information herein represents the opinion of the author(s), but not necessarily those of VanEck.

This commentary is not intended as a recommendation to buy or to sell any of the sectors or securities mentioned herein. Holdings will vary for the MOAT ETF and its corresponding Index. For a complete list of holdings in the ETF, please click here:

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.

Fair value estimate: the Morningstar analyst’s estimate of what a stock is worth.

Price/Fair Value: ratio of a stock’s trading price to its fair value estimate.

The Morningstar® Wide Moat Focus IndexSM was created and is maintained by Morningstar, Inc. Morningstar, Inc. does not sponsor, endorse, issue, sell, or promote the VanEck Vectors Morningstar Wide Moat ETF and bears no liability with respect to that ETF or any security. Morningstar® is a registered trademark of Morningstar, Inc. Morningstar® Wide Moat Focus IndexSM is a service mark of Morningstar, Inc.

The Morningstar® Wide Moat Focus IndexSM consists of U.S. companies identified as having sustainable, competitive advantages and whose stocks are attractively priced, according to Morningstar.

Effective June 20, 2016, Morningstar implemented several changes to the Morningstar Wide Moat Focus Index construction rules. Among other changes, the index increased its constituent count from 20 stocks to at least 40 stocks and modified its rebalance and reconstitution methodology. These changes may result in more diversified exposure, lower turnover and longer holding periods for index constituents than under the rules in effect prior to this date.

The S&P 500® Index is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Van Eck Associates Corporation. Copyright © 2021 S&P Dow Jones Indices LLC, a division of S&P Global, Inc., and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC’s indices please visit S&P® is a registered trademark of S&P Global and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. Neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors shall have any liability for any errors, omissions, or interruptions of any index or the data included therein.

An investment in the VanEck Vectors Morningstar Wide Moat ETF (MOAT®) may be subject to risks which include, among others, investing in equity securities, consumer discretionary, consumer staples, financials, health care, industrials and information technology sectors, medium-capitalization companies, market, operational, 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 concentration risks, which may make these investments volatile in price or difficult to trade. 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 a Fund’s investment objective, risks, charges and expenses carefully before investing. To obtain a prospectus and summary prospectus for VanEck Funds and VanEck Vectors ETFs, which contain this and other information, call 800.826.2333 or visit Please read the prospectus and summary prospectus for VanEck Funds and VanEck Vectors ETFs carefully before investing.