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For the Month Ending August 31, 2018
Domestic moat companies, as represented by the Morningstar®Wide Moat Focus IndexSM(MWMFTR, or "U.S. Moat Index"), lagged the S&P 500®Index in August (1.94% vs. 3.26%, respectively) but remained only slightly behind for the YTD period (9.23% vs. 9.94%, respectively). International moats on the other hand proved more resilient than the broad international market for the month. The Morningstar®Global ex-US Moat Focus IndexSM(MGEUMFUN, or "International Moat Index") led the MSCI All Country World Index ex-USA in August (-1.32% vs. -2.09%, respectively) and ended the month ahead since the beginning of the year (-2.73% vs. -3.53%, respectively).
The healthcare sector led US Moat Index performance for the month, boosted by strong returns from CVS Health Corp. (CVS US, +16.00%) and Express Scripts Holding Co. (ESRX US, +10.77). CVS’s strong second quarter results, combined with its rigorous defense of its pharmacy benefit manager business and a favorable update related to its proposed Aetna acquisition, led Morningstar to reaffirm its positive outlook. The top performer in August was Guidewire Software Inc. (GWRE US, +16.67%), a software company that provides solutions to property and casualty insurers. Following its strong run, it approached fair value at the end of the month according to Morningstar analysts. Holding the US Moat Index back in August were retailer L Brands Inc. (LB US, -14.77%), which was downgraded to a narrow economic moat rating by Morningstar analysts in late July, and industrial and materials companies. Stericycle Inc. (SRCL US, -11.69%), which provides medical waste management services, struggled in August, though Morningstar believes the firm is grappling with near-term pricing issues and sees ample growth opportunities for the company. Philip Morris International Inc. (PM US, -9.75%) also posted negative returns in August. Morningstar analysts see an opportunity in this vice stock as tobacco valuations appear to be detached from fundamentals and the industry undergoes some of its biggest changes in decades.
As international stocks continue to struggle in 2018, the International Moat Index has weathered near-term pressures slightly better than the broad markets. Strong contribution from Australia, particularly TPG Telecom Ltd. (TPM AU, +45.92%), helped lift the International Moat Index in August. TPG Telecom rallied following the announcement at month end of its intended merger with Vodafone to form one of the largest telecomm companies in the Australian market. This rally pushed the company to a premium to its fair value, according to Morningstar’s fair value estimate. The International Moat Index’s two Mexican airports continued to perform well, with both among the top five performers for the index in August. Germany was the top detractor from a country perspective, in part driven by Bayer AG (BAYN GR, -16.09%). Bayer is navigating the fallout from a verdict reached on August 10 in relation to the many glyphosate weed killer lawsuits the company faces. With nearly 8,000 cases pending, Morningstar analysts acknowledge the potential litigation-related costs faced by Bayer, but also consider the August market reaction to be overdone.
|Guidewire Software Inc||16.67|
|CVS Health Corp||16.00|
|Express Scripts Holding Co||10.77|
|L Brands Inc||-14.77|
|Philip Morris International Inc||-9.75|
|Franklin Resources Inc||-7.52|
|Microchip Technology Inc||-7.51|
|TPG Telecom Ltd||45.92|
|Magellan Financial Group Ltd||14.14|
|Grupo Aeroportuario del Pacifico SAB de CV Class B||13.84|
|SoftBank Group Corp||12.29|
|Grupo Aeroportuario del Centro Norte SAB de CV||8.48|
|Telecom Italia SpA||-17.21|
|Genting Singapore Ltd||-16.94|
|Banco Bilbao Vizcaya Argentaria SA||-15.05|
|Campbell Soup Co||CPB US|
|General Mills Inc||GIS US|
|Comcast Corp A||CMCSA US|
|Philip Morris International||PM US|
|Dominion Energy Inc||D US|
|Procter & Gamble||PG US|
|Hershey Foods Corp||HSY US|
|PepsiCo Inc||PEP US|
|Colgate-Palmolive Co||CL US|
|Franklin Resources Inc||BEN US|
|Monsanto Co.||MON US|
|Veeva Systems Inc A||VEEV US|
|Stericycle Inc||SRCL US|
|VF Corp||VFC US|
|Lowes Cos Inc||LOW US|
|TransDigm Group||TDG US|
|John Wiley & Sons Inc. A||JW.A US|
|Emerson Electric Co||EMR US|
|Visa Inc A||V US|
|NIKE Inc B||NKE US|
|Credit Suisse Group AG||Switzerland|
|UBS Group AG||Switzerland|
|LINE Corp Shs||Japan|
|Beijing Capital Intl Airport||China|
|Agricultural Bank of China||China|
|SK Telecom||South Korea|
|Shire PLC||United Kingdom|
|Rolls-Royce Holdings PLc||United Kingdom|
|CI Financial Inc.||Canada|
|National Australia Bank||Australia|
|SCOR SE Act Prov Regpt||France|
|Murata Mfg Co. Ltd 100||Japan|
|Magellan Financial Group||Australia|
|GlaxoSmithKline PLC||United Kingdom|
|Anta Sports Products||China|
|Yum China Holdings Inc||China|
|Platinum Asset Management Ltd||Australia|
|IOOF Holdings Limited||Australia|
|TPG Telecom Ltd||Australia|
|Nordea Bank AB Common Stock||Sweden|
|Contact Energy Limited Common Stock||New Zealand|
|Telecom Italia Az.||Italy|
|Grupo Aeroportuario del Centro Norte S.A.B. de C.V.||Mexico|
|Smiths Group PLC Ordinary Shares||United Kingdom|
|Samsonite International S.A. Common Stock||Hong Kong|
|Meggitt PLC Shs||United Kingdom|
|Telefonica S.A. Common Stock||Spain|
|Crown Resorts Ltd||Australia|
|Mobile TeleSystems PJSC *||Russian Federation|
|Danske Bank A/S Shs||Denmark|
|Vodafone Group PLC Common Stock||United Kingdom|
|Roche Holding AG Dividend Right Cert||Switzerland|
|Swedbank AB Ordinary Shares A||Sweden|
|GEA Group Aktiengesellschaft||Germany|
|Commonwealth Bank of Australia Ordinary Share||Australia|
|SoftBank Group Corp shs||Japan|
|Bayer AG Namen-Akt||Germany|
|Grupo Aeroportuario del Pacifico SAB de CV Com Stk B||Mexico|
|China Resources Gas Group Ltd||China|
This commentary is not intended as a recommendation to buy or to sell any of the named securities. Holdings will vary for the MOAT and MOTI ETFs and their corresponding Indices.
An investor cannot invest directly in an index. Returns reflect past performance and do not guarantee future results. Results reflect the reinvestment of dividends and capital gains, if any. Index returns do not represent Fund returns. The Index does not charge management fees or brokerage expenses, nor does the Index lend securities, and no revenues from securities lending were added to the performance shown.
Fair value estimate: the Morningstar analyst's estimate of what a stock is worth.
Price/Fair Value: ratio of a stock's trading price to its fair value estimate.
The Morningstar®Wide Moat Focus IndexSMand Morningstar®Global ex-US Moat Focus IndexSMwere created and are maintained by Morningstar, Inc. Morningstar, Inc. does not sponsor, endorse, issue, sell, or promote the VanEck Vectors Morningstar Wide Moat ETF or VanEck Vectors Morningstar International Moat ETF and bears no liability with respect to the ETFs or any security. Morningstar®is a registered trademark of Morningstar, Inc. Morningstar Wide Moat Focus Index and Morningstar Global ex-US Moat Focus Index are service marks of Morningstar, Inc.
The Morningstar®Wide Moat Focus IndexSMconsists of U.S. companies identified as having sustainable, competitive advantages and whose stocks are attractively priced, according to Morningstar.
The Morningstar®Global ex-US Moat Focus IndexSMconsists of companies outside of the U.S. identified as having sustainable, competitive advantages and whose stocks are attractively priced, according to Morningstar.
The S&P 500®Index consists of 500 widely held common stocks covering industrial, utility, financial and transportation sector; as an Index, it is unmanaged and is not a security in which investments can be made.
The S&P 500®Index is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Van Eck Associates Corporation. Copyright © 2018 S&P Dow Jones Indices LLC, a division of S&P Global, Inc., and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC's indices please visit www.spdji.com. S&P is a registered trademark of S&P Global and Dow Jones®is a registered trademark of Dow Jones Trademark Holdings LLC. Neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third-party licensors make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third-party licensors shall have any liability for any errors, omissions, or interruptions of any index or the data included therein.
The MSCI All Country World Index ex USA Index captures large and mid-cap representation across 22 of 23 developed markets countries (excluding the U.S.) and 24 emerging markets countries.
Effective June 20, 2016, Morningstar implemented several changes to the Morningstar®Wide Moat Focus IndexSMconstruction rules. Among other changes, the index increased its constituent count from 20 stocks to at least 40 stocks and modified its rebalance and reconstitution methodology. These changes may result in more diversified exposure, lower turnover, and longer holding periods for index constituents than under the rules in effect prior to this date.
Effective June 20, 2016, Morningstar implemented several changes to the Morningstar®Global ex-US Moat Focus IndexSMconstruction rules. Among other changes, the index increased its constituent count from 50 stocks to at least 50 stocks and modified its rebalance and reconstitution methodology. These changes may result in more diversified exposure, lower turnover, and longer holding periods for index constituents than under the rules in effect prior to this date.
An investment in VanEck Vectors Morningstar Wide Moat ETF (MOAT®) may be subject to risks which include, among others, investing in the health care, consumer discretionary, industrials, financial services sectors, medium-capitalization companies, equity securities, market, operational, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversified, and concentration risks, which may make these investments volatile in price or difficult to trade. Medium-capitalization companies may be subject to elevated risks. The Fund's assets may be concentrated in a particular sector and may be subject to more risk than investments in a diverse group of sectors.
An investment in VanEck Vectors Morningstar International Moat ETF (MOTI®) may be subject to risks which include, among others, equity securities, investing in the financial services, health care, industrials and telecommunication sectors, medium-capitalization companies, foreign securities, foreign currency, emerging market issuers, special risk considerations of investing in Asian and European issuers, depositary receipts, cash transactions, market, operational, high portfolio turnover, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversified, and concentration risks, which may make these investments volatile in price or difficult to trade. Foreign investments are subject to risks, which include changes in economic and political conditions, foreign currency fluctuations, changes in foreign regulations, and changes in currency exchange rates which may negatively impact the Fund's returns. Medium-capitalization companies may be subject to elevated risks. The Fund's assets may be concentrated in a particular sector and may be subject to more risk than investments in a diverse group of sectors.
You can lose money by investing in the VanEck Morningstar Wide Moat Fund (the “Fund”). Any investment in the Fund should be part of an overall investment program rather than a complete program. An investment in the Fund may be subject to risks which include, among others, investing in concentration, equity securities, index tracking and data, consumer discretionary, financial services, the health care, industrials, information technology, underlying fund, market, medium-capitalization companies, new fund, non-diversification, operational, portfolio turnover and replication management risks, which may make these investments volatile in price or difficult to trade. Medium-capitalization companies may be subject to elevated risks. The Fund's assets may be concentrated in a particular sector and may be subject to more risk than investments in a diverse group of sectors.
ETF shares are not individually redeemable and will be issued and redeemed at their Net Asset Value (NAV) only through certain authorized broker-dealers in large, specified blocks of shares called "creation units" and otherwise can be bought and sold only through exchange trading. Shares may trade at a premium or discount to their NAV in the secondary market. You will incur brokerage expenses when trading ETF shares in the secondary market. Past performance is no guarantee of future results.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider a Fund's investment objective, risks, charges and expenses carefully before investing. To obtain a prospectus and summary prospectus for VanEck Funds and VanEck Vectors ETFs, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus for VanEck Funds and VanEck Vectors ETFs carefully before investing.
Morningstar Wide Moat ETF
|Index:||Morningstar® Wide Moat Focus IndexSM (MWMFTR)|
Wide Moat Fund
|Index:||Morningstar® Wide Moat Focus IndexSM (MWMFTR)|
Morningstar International Moat ETF
|Index:||Morningstar® Global ex-US Moat Focus IndexSM (MGEUMFUN)|
Global Wide Moat ETF
|Index:||Morningstar® Global Wide Moat Focus IndexSM (MSGWMFNU)|
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Investing involves risk, including possible loss of principal. An investor should carefully consider investment objectives, risks, charges and expenses carefully before investing. This and other information can be found in the appropriate regulatory documents made available for a specified country as designated in this website.