Profiting significantly through the world's most secure ETFs, derived from robust burghal growths

The VanEck Morningstar US Sustainable Wide Moat ETF, launched in 2015, and its counterparts, the Global Wide Moat ETF (launched in July 2020) and the US SMID Moat ETF (launched in January 2024), are a new addition to the world of Exchange-Traded Funds (ETFs). These ETFs, managed by VanEck in partnership with Morningstar's research team, offer investors an opportunity to invest in companies with a strong competitive advantage, or a "moat."

The VanEck Morningstar US Sustainable Wide Moat ETF, with 62 positions, includes companies such as Alphabet Inc Class A, Allegion PLC, Teradyne Inc, and Tyler Technologies. The Global Wide Moat ETF, with 74 positions, expands the investment horizon, including companies like Westpac Banking, Sanofi, Imperial Brands, Tyler Technologies, Transunion, Allegion, and more.

The US Wide Moat ETF, launched in January 2024, focuses on moat companies and its portfolio includes Transunion, Allegion, RTX Corporation, Adobe, Pfizer, Campbell Soup, and more. The US SMID Moat ETF, also launched in January 2024, focuses on U.S. small- and mid-cap companies, with a portfolio that includes Asbury Automotive, Hasbro, Chart Industries, and Carmax.

Morningstar's analysts have developed a catalog of criteria to evaluate the strength of a moat. Stocks are categorized into three groups based on their moat: companies with a wide moat, companies with a narrow moat, and companies without a moat. The evaluation process includes qualitative analysis and quantitative factors such as Return on Capital (ROC). The five moat sources considered are intangible assets, switching costs, network effects, cost advantages, and efficiency due to size.

For investors who prefer a moat strategy but avoid individual stocks, these ETFs provide a convenient and diversified investment option. The top 10 holdings in the VanEck Morningstar US Wide Moat ETF, for example, represent around 27% of the portfolio.

It's worth noting that the selection of titles in the US Sustainable Wide Moat ETF and the Global Wide Moat ETF differs from that of the US SMID Moat ETF. Tyler Technologies and Allegion, for instance, are among the top stocks in both the US Sustainable Wide Moat ETF and the Global Wide Moat ETF.

This article first appeared in the new print edition of BÖRSE ONLINE.