Morningstar ‘Wide Moat’ ETF Soaks Up Warren Buffett’s Approach

Market Vectors Wide Moat ETF (MOAT) has done a decent job of gathering assets during its first year but lagged the S&P 500 by a slight margin. The ETF’s tracking benchmark incorporates investing principles popularized by Warren Buffett.

The fund has attracted $184 million to place fourth on the list of most-successful U.S. ETFs launched over the past 12 months. The ETF marked its one-year anniversary this week.

MOAT is managed by Van Eck’s Market Vectors unit and tracks a benchmark designed by investment researcher Morningstar.

The fund is a good example of index-based ETFs that attempt to incorporate active-manager strategies in rules-based benchmarks. MOAT charges an expense ratio of 0.49%. [ETF Targets Companies with Competitive Advantage]

The ETF has posted a total return of 15.8% for the trailing year, versus 17.7% for the S&P 500. It is classified as a large-blend fund.

Morningstar says the index uses the firm’s proprietary methodology to identify companies with long-term, distinct, and sustainable competitive advantages, or “economic moats,” which allows the company to earn sustainable excess economic profits, as measured by the return on invested capital relative to the company’s cost of capital.

Next page: Buffett’s approach and MOAT