MOAT’s primary investment strategy is to make at least an 80% investment in stocks that are selected by a replicate sample of the Index [Index ticker: MWMFTR]. The indexer is Morningstar®, a leading financial analysis firm. The indexed stocks are selected from among 97% of all stocks traded in the U.S. market. Morningstar uses a proprietary method to screen stocks with wide economic moats [an “economic moat”, or “competitive advantage”, is the company’s unique ability among competitors for earning profits over an extended period of time]. Morningstar uses an additional proprietary method to assign a fair value to each screened stock. The top 20 stocks with greatest discount price relative to fair value are used in the Index.
It’s too early to evaluate the fund’s annual yield, portfolio turnover rate, and investment performance. Therefore, watch the fund before committing to a long-term investment. Expect the future turnover rate to be less than 100% if the stocks have competitive advantages that favor long term investment. However, quarterly fluctuations in discount price could increase the Index and Portfolio’s turnover rates. The articles Scorecard appraisal and scorecard App provide additional information on ETF risk-benefit analysis.
MOAT’s historical index is compared with SPY’s historical index in the following Bloomberg Chart:
It appears that MOAT’s index outperformed SPY’s by 5.24% during the last 12 months.
The fund’s underlying assets are solid, but only time will tell if the fund is wisely managed.
Copyright © 2012 Douglas R. Knight