Wide Moat ETFs Stands Tall as Legitimate Buffett Play
After a technical snafu delayed its release, Berkshire Hathaway’s (BRK-A) second-quarter 13F filing was made available Thursday, showing legendary value investor Warren Buffett was busy during the second quarter.
Buffett’s Berkshire sold its stake in newspaper publisher Gannett (GCI) and trimmed its stake in ratings agency Moody’s (MCO). Berkshire also dramatically slashed its stakes in Kraft Foods (KRFT) and Mondelez (MDLZ), somewhat diminishing the allure of consumer staples ETFs as an avenue for investors looking to gain exposure to some of Berkshire’s equity holdings. [An ETF Patterned on Buffett's Wide-Moat Approach]
One ETF that commands consideration as a “mirroring Buffett” play is the Market Vectors Wide Moat ETF (MOAT) . MOAT MOAT tracks the Morningstar Wide Moat Focus Index, which is designed to focus on companies with distinct competitive advantages. The strategy has been a rewarding one as MOAT has soared 26.6% since coming to market in April 2012. Investors have taken notice and have poured almost $288 million into the fund.
MOAT has previously been highlighted as one of the ETFs with decent exposure to Facebook (FB) and that it does have with a 7.4% weight to the social media company. However, MOAT is not only useful for gaining access to companies with deep competitive advantages, a strategy Buffett himself has endorsed, but MOAT also features some Berkshire holdings among its 21-stock lineup. [Like This ETF After Facebook's Pop]
Berkshire’s “B” shares garner an almost 4.9% weight in MOAT. Berkshire’s 13F also shows the holding company owns stakes in three MOAT constituents: Bank of New York Mellon (BK), General Electric (GE) and oil services provider National Oilwell Varco (NOV). Those stocks combine for about 15% of MOAT’s weight.
Facebook was part of a group of eight newly added stocks to MOAT’s index. Others included Schlumberger, Amgen (AMGN) and eBay (EBAY).
It is conceivable that MOAT could offer increased use as a “Buffett ETF” because Coca-Cola (KO) is on the list of 10 stocks that could next be added to the ETF’s roster. The world’s largest soft-drink maker is one of Buffett’s largest holdings.
Market Vectors Wide Moat ETF
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of Facebook, GE, Coca-Cola and MOAT.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
