VanEck Morningstar SMID Moat ETF Outperforms US Stock Market in January
The Morningstar US Small-Mid Cap Moat Focus Index, also known as the SMID Moat Index, outperformed all three segments of the US stock market in January. The SMID Moat Index provides a mix of mid-cap and small-cap exposure to US companies with sustainable competitive advantages.
Small Caps Followed by Mid Caps
Despite its relatively lower exposure to small-cap stocks, the SMID Moat Index outperformed them by 2.25% in January. It also outperformed its sister index, the Morningstar Wide Moat Focus Index, which had a strong month as well.
Sectors Contributing to the SMID Moat Index’s Performance
The SMID Moat Index benefited the most from its exposure to the consumer discretionary, industrials, and information technology sectors. No single sector posted negative returns within the index. Roughly 75% of the SMID Moat Index’s exposure is in mid-cap stocks, so stock selection within that market segment had a significant impact on its performance. Although it had less exposure, stock selection within smaller cap stocks also contributed to its strong performance in January.
Companies Posting Negative Returns
Only five SMID Moat Index companies posted negative returns in January: Baxter International, Kellogg Co., Hasbro Inc., Sirius XM Holdings, and Zimmer Biomet Holdings.
Leading Companies in the Automotive Business
Some of the leading companies in the SMID Moat Index are in the automotive business, including Adient PLC, Lithia Motors, Sensata Technologies, and ABG. These companies have competitive advantages such as cost advantage, intangible assets, and a differentiated business model.
ICU Medical: A Comprehensive Infusion and IV Provider
Another leading company in the SMID Moat Index is ICU Medical, a comprehensive infusion and IV provider. The company benefits from its unrivaled scale in consumables and its ability to offer rock-bottom prices that competitors would find hard to beat. ICU Medical is currently trading near fair value.
VanEck Morningstar SMID Moat ETF
The VanEck Morningstar SMID Moat ETF (SMOT) aims to track the price and yield performance of the Morningstar US Small-Mid Cap Moat Focus Index as closely as possible. To receive more insights on Moat Investing, sign up for the subscription center.
Note: Past performance is not a guarantee of future results. Fund performance current to the most recent month end can be found by visiting vaneck.com or by calling 800.826.2333.