This ESG Fund Has a Wide Moat 

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker, financial journalist, and money manager.

The VanEck Morningstar ESG Moat ETF (BATS:MOTE) tracks an equal-weighted index of U.S. stocks perceived to have high fair value, sustainable competitive advantage, positive momentum and excellent environmental, social and governance (ESG) ratings.

MOTE is a passively managed fund which tracks an index that provides exposure to U.S. stocks of any market-capitalization size that are deemed “wide moat” companies (attractively priced stocks that have sustainable competitive advantages) with low ESG risk. The fund selects wide-moat companies using quantitative and qualitative factors while screening out those with severe or high ESG Risk Scores, as well as those viewed as controversial.

Eligible securities are then ranked by momentum to only include the top 80%. Each sector is capped at 10%. The index is equally weighted, divided into two equal sub-portfolios, which follow a staggered rebalance strategy. Half of the portfolio is rebalanced in June and the other in December.

The fund normally invests at least 80% of its total assets in securities that compose the fund’s benchmark index. The U.S. Sustainability Moat Focus Index provides exposure to attractively valued companies with long-term competitive advantages, while excluding those companies with high ESG risks. The fund is non-diversified.

Source: StockCharts.com

As with any opportunity, potential investors should conduct their own due diligence in deciding whether this fund fits their own individual investing needs and portfolio goals.

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