MOAT goes ESG

18 December 2021

The VanEck Morningstar US Wide Moat UCITS ETF began tracking Morningstar US Sustainable Moat Focus Index after the market close on 17 December 2021. The fund was renamed VanEck Morningstar US Sustainable Wide Moat UCITS ETF to reflect the updated investment strategy. As a result of the change, investors in the ETF receive a more sustainable exposure, while maintaining the benefits of the existing investing approach, based on buying relatively attractively priced shares of companies possessing long-term competitive advantages.

Rationale

VanEck is striving to improve its sustainable footprint by increasingly focusing on products following sustainable investment strategies. VanEck Morningstar US Wide Moat UCITS ETF had not directly incorporated any Sustainability considerations. Conversely, the new underlying index of the ETF will introduce product involvement screens related to controversial weapons, civilian firearms and thermal coal, as well as companies deriving majority of the revenues from Tobacco. It will also screen companies involved in severe controversies during the last three years and those with elevated levels of ESG- and Carbon-related risks, according to Sustainalytics.

What will change in the investment process?

In addition to selection parameters incorporated in the incumbent index to select attractively valued companies with long-term competitive advantages, the Morningstar US Sustainability Moat Focus Index only includes stocks with the following attributes:

Product Involvement
- No involvement in production of controversial weapons
- No involvement in civilian firearms production
- No involvement in Thermal Coal extraction or power generation
- Not more than 50% of revenue derived from Tobacco Production and Distribution

Sustainalytics ESG Scores
- ESG Risk rating not High or Severe
- Carbon Risk rating not High or Severe
- Controversy rating of “Severe” not reached at any point in time during the last 3 years

Momentum Screen
- Not in the worst 20% of yearly performers among eligible securities

Additionally, the index selection targets a Sustainalytics ESG Risk score equivalent to top 32.5% in the respective Morningstar Fund universe by means of iterative selection process that will replace the worst ESG performers until the target score is reached. The rebalancing frequency of the sub-portfolios will change from Semi-Annual to Annual . For further information about the change, please consult the Q&A we published on 24 November 2021. Investors should always consider risks before investing.

Important Disclosure

This is a marketing communication for professional investors only. Please refer to the UCITS prospectus and to the Key Investor Information Document (KIID) before making any final investment decisions. This information originates from VanEck Securities UK Limited (FRN: 1002854), an Appointed Representative of Sturgeon Ventures LLP (FRN: 452811), who is authorised and regulated by the Financial Conduct Authority in the UK. The information is intended only to provide general and preliminary information to FCA regulated firms such as Independent Financial Advisors (IFAs) and Wealth Managers. Retail clients should not rely on any of the information provided and should seek assistance from an IFA for all investment guidance and advice. VanEck Securities UK Limited and its associated and affiliated companies (together “VanEck”) assume no liability with regards to any investment, divestment or retention decision taken by the investor on the basis of this information. The views and opinions expressed are those of the author(s) but not necessarily those of VanEck. Opinions are current as of the publication date and are subject to change with market conditions. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results. Information provided by third party sources is believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. Brokerage or transaction fees may apply.

VanEck Asset Management B.V., the management company of VanEck Morningstar US Sustainable Wide Moat UCITS ETF (the "ETF"), a sub-fund of VanEck UCITS ETFs plc, is a UCITS management company under Dutch law registered with the Dutch Authority for the Financial Markets (AFM). The ETF is registered with the Central Bank of Ireland, passively managed and tracks an equity index. Investing in the ETF should be interpreted as acquiring shares of the ETF and not the underlying assets. Investors must read the sales prospectus and key investor information before investing in a fund. These can be obtained free of charge at www.vaneck.com, from the local information agent Computershare Investor Services PLC or from the Management Company.

Morningstar® US Sustainability Moat Focus Index is a trade mark of Morningstar Inc. and has been licensed for use for certain purposes by VanEck. VanEck Morningstar US Sustainable Wide Moat UCITS ETF is not sponsored, endorsed, sold or promoted by Morningstar and Morningstar makes no representation regarding the advisability in VanEck Morningstar US Sustainable Wide Moat UCITS ETF.
Effective December 17, 2021 the Morningstar® Wide Moat Focus IndexTM has been replaced with the Morningstar® US Sustainability Moat Focus Index.
Effective June 20, 2016, Morningstar implemented several changes to the Morningstar Wide Moat Focus Index construction 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.
It is not possible to invest directly in an index.

All performance information is based on historical data and does not predict future returns. Investing is subject to risk, including the possible loss of principal.

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