Is VanEck Morningstar International Moat ETF (MOTI) a Strong ETF Right Now?
The VanEck Morningstar International Moat ETF (MOTI) made its debut on 07/13/2015, and is a smart beta exchange traded fund that provides broad exposure to the World ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Van Eck, and has been able to amass over $236.52 million, which makes it one of the average sized ETFs in the World ETFs. Before fees and expenses, this particular fund seeks to match the performance of the Morningstar Global ex-US Moat Focus Index.
The Morningstar Global ex-US Moat Focus Index tracks the overall performance of 50 attractively priced companies outside the U.S. with sustainable competitive advantages.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for this ETF are 0.58%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 3.08%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Brp Inc (DOO) accounts for about 2.50% of the fund's total assets, followed by Nice Ltd (NICE) and Sodexo Sa (SW).
The top 10 holdings account for about 22.02% of total assets under management.
Performance and Risk
The ETF has added about 6.20% and was up about 15.35% so far this year and in the past one year (as of 09/19/2023), respectively. MOTI has traded between $24.73 and $33.57 during this last 52-week period.
The ETF has a beta of 0.83 and standard deviation of 17.75% for the trailing three-year period, making it a medium risk choice in the space. With about 78 holdings, it effectively diversifies company-specific risk.
Alternatives
VanEck Morningstar International Moat ETF is a reasonable option for investors seeking to outperform the World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Total International Stock ETF (VXUS) tracks FTSE Global All Cap ex US Index and the Vanguard FTSE Developed Markets ETF (VEA) tracks FTSE Developed All Cap ex US Index. Vanguard Total International Stock ETF has $57.73 billion in assets, Vanguard FTSE Developed Markets ETF has $112.45 billion. VXUS has an expense ratio of 0.07% and VEA charges 0.05%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the World ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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VanEck Morningstar International Moat ETF (MOTI): ETF Research Reports
Nice (NICE) : Free Stock Analysis Report
Vanguard FTSE Developed Markets ETF (VEA): ETF Research Reports
Vanguard Total International Stock ETF (VXUS): ETF Research Reports
