The Global Wide MOAT Index: Competitive Advantage...for the World

The capital markets are banking on a vaccine rally to carry through to the end of 2020 and well into 2021. As the global economy recovers, ETF investors can look to strategies that capitalize on value-oriented holdings like the VanEck Vectors Morningstar Global Wide Moat ETF (GOAT).

One of the highlights of GOAT is that it takes advantage of “Morningstar’s equity research team of more than 100 analysts covers over 1,500 companies globally. More than 200 asset managers and 75,000 financial advisors rely on Morningstar’s research. All of Morningstar’s equity analysts follow a single, consistent research methodology,” per the VanEck website.

The MOAT strategy lends itself well to the U.S. and international markets with their own respective ETFs. In this case, GOAT focuses specifically on all of it — the global markets in totality.

GOAT seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Morningstar Global Wide Moat Focus Index (the “index”). The fund normally invests at least 80% of its total assets in securities that comprise the fund’s benchmark index.

The index is comprised of securities issued by companies that Morningstar determines to have sustainable competitive advantages based on a proprietary methodology that considers quantitative and qualitative factors (“wide moat companies”). It offers the following features:

  • Wide Moat Companies: A focus on global companies Morningstar believes possess sustainable competitive advantages, or “moats”
  • Focus on Valuations: Index targets companies trading at attractive prices relative to Morningstar’s estimate of fair value
  • Morningstar’s Equity Research: Index fueled by Morningstar’s forward-looking, rigorous equity research process driven by over 100 analysts globally

“Applying Morningstar’s moat investing philosophy to U.S. companies has historically generated excess returns relative to the broad U.S. equity markets,” the VanEck website notes. “Strong stock selection has been a primary driver of excess returns since 2007 for this long-term, core investment strategy.”

As Global Economy Recovers, Get MOAT Exposure With This ETF 1

Global Growth is Expected

So where exactly is the global market headed? After all, the soundest of strategies are null and void if the economy goes sideways.

Per a CNBC article, the “Organization for Economic Cooperation and Development (OECD) expects the global economy to build momentum over the coming two years, with real gross domestic product (GDP) growth projected to reach pre-pandemic levels by the end of 2021.”

“For the first time since the pandemic began, there is now hope for a brighter future,” the OECD said. “The worst has been avoided, most of the economic fabric has been preserved and could revive quickly, but the situation remains precarious for many vulnerable people, firms and countries.”

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