Van Eck Unveils Wide Moat ETF

Van Eck Global, the fifth-largest U.S. ETF sponsor and the parent company of Market Vectors, unveiled the Market Vectors Morningstar Wide Moat Research ETF MOAT today. Using Morningstar analysis to identify companies with deep, long-term competitive advantages, MOAT will track the Moat Focus Index. The index focuses on U.S. companies, excluding REITs. American depositary receipts are also excluded. Morningstar said its universe of wide-moat companies includes 120 companies. The firm finds the 20 cheapest companies and rank-orders them by their price/fair value ratios. The 20 companies with the lowest ratios are selected and equally-weighted at 5%. The index rebalances once a year. From its inception in September of 2002 through March 31, 2012, the Index has outperformed the S&P 500 Index, producing a 15.3% annualized total return (compared to 8.1% for the S&P 500), according to a statement issued by Van Eck. "Wide-moat company analysis is a cornerstone of Morningstar's stock investment philosophy. It is incorporated into its equity research and fund analysis. This research methodology has been successful in identifying companies likely to generate excess returns over time compared to the overall market," said Allison Lovett, Vice President of Marketing at Market Vectors, in the statement. "Because of this, we believe MOAT may offer investors a very attractive core holding for their equity portfolios." MOAT will be home to 20 stocks and an expense ratio of 0.47%, which is capped until at least May 1, 2013.. The ETF's constituents have a weighted average market capitalization of $66.56 billion with an average price/earnings ratio of 15.99 and an average book value of 2.2. At the sector level, 25% of MOAT's index weight is devoted to technology names. Financials receive an allocation of almost 20% while health care and materials names both land weights above 15%. MOAT doesn't give 5% weights to each of its holdings, but percentage allocations range from 4.6% to 5.45%, indicating this is close to being an equal-weight fund. The ETF's top-five holdings include Amazon AMZN, CME Group CME, Cisco CSCO, Northern Trust NTRS and Google GOOG. MOAT is the 48th Market Vectors ETF and the fifth new fund introduced by the firm in 2012. For more on new Market Vectors ETFs, please click HERE.