VanEck Morningstar US SMID Moat UCITS ETF Acc

Issuer: Van Eck

Asset Class: Equity

TER: 49bps

Trading Currency: USD

Pays Income: False

Listing Date: 17 Jan 2024

Ticker: SMOT

ISIN: IE000SBU19F7

This investment vehicle provides targeted exposure to US small and mid-capitalization companies that possess durable competitive advantages, often referred to as 'economic moats.' The strategy is rooted in the belief that companies with strong moats are better positioned to fend off competitors and sustain profitability over the long term. By focusing on the small and mid-cap segment of the market, the portfolio aims to capture the growth potential inherent in these often under-researched companies. The selection process seeks to identify these quality businesses when they are trading at attractive valuations relative to their intrinsic worth.

The underlying portfolio is constructed based on a forward-looking equity research methodology that involves a rigorous analysis to identify companies with one or more of five key sources of economic moats: intangible assets, significant cost advantages, high customer switching costs, the network effect, or efficient scale. Only companies that are deemed to have a substantial and sustainable competitive edge are considered for inclusion. Furthermore, the strategy incorporates a valuation component, aiming to invest in these high-quality firms only when their market price is below an estimate of their fair value, thereby adding a layer of value discipline to the quality-focused approach.

This approach offers a compelling proposition for investors seeking to move beyond traditional market-cap-weighted indices. It combines the growth potential of smaller US companies with the resilience of businesses that have established strong barriers to entry. By systematically targeting attractively priced firms with wide or narrow economic moats, the strategy aims to deliver long-term capital appreciation.