SMOT Profile
The VanEck Morningstar SMID Moat ETF focuses on investing in small- and medium-capitalization companies that exhibit sustainable competitive advantages, or "economic moats." The fund adheres to a strategy of allocating at least 80% of its total assets to securities that are constituents of its benchmark index. This index, curated by Morningstar, includes companies identified as having enduring competitive advantages that can help them maintain superior financial performance over the long term.
Morningstar's methodology for constructing the index involves a rigorous analysis of both quantitative and qualitative factors to determine which small- and medium-cap companies possess economic moats. These moats are assessed based on various criteria, such as strong brand recognition, cost advantages, and other strategic factors that contribute to a company's ability to sustain its market position. This approach aims to identify companies that are well-positioned to outperform their peers due to their competitive strengths.
The ETF's investment strategy reflects a commitment to investing in firms with proven business models and solid financial health. By focusing on companies with sustainable moats, the fund seeks to deliver investors exposure to high-quality growth opportunities within the SMID (small- and mid-cap) segment. This strategy is designed to enhance potential returns while managing risk through a portfolio of companies with defensible competitive positions.
As a non-diversified fund, the VanEck Morningstar SMID Moat ETF holds a concentrated portfolio of stocks from its benchmark index. This concentration allows the fund to target specific high-quality small- and medium-cap companies but also implies a higher level of exposure to the performance of its selected sector. Investors in the ETF benefit from a strategic focus on companies with sustainable competitive advantages, potentially offering more stable and robust returns in comparison to a broader small- and mid-cap market index.
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