VanEck Morningstar SMID Moat ETF’s management team is rated Average, but a solid investment process still helps this strategy retain its Morningstar Medalist Rating of Silver. The portfolio maintains a sizable cost advantage over competitors, priced within the second-cheapest fee quintile among peers.  

 The strategy's effective investment philosophy supports an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in momentum exposure and an overweight in yield exposure compared with category peers. Momentum is the premise that stocks that have recently outperformed will continue to do so. With low momentum exposure, the portfolio is holding stocks that managers believe to be undervalued. And a high yield exposure is rooted in holding high dividend-paying or buyback stocks. The strategy’s management team earns an Average People Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

DoorDash

Interactive Brokers

Equitrans Midstream

Chart Industries

Las Vegas Sands

Eastman Chemical

Capital One

Wynn Resorts

Discover

Lyft

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. VanEck Morningstar SMID Moat ETF earns an Above Average Process Pillar rating. 

The most important driver of the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. 

 This strategy prefers more value-oriented stocks compared with the average fund in its peer group, the Mid-Cap Blend Morningstar Category. But in terms of size exposure, it is similar to the average. Examining additional factor exposure, this strategy has consistently had low exposure to momentum stocks in the past few years. Momentum investors tend to expect stocks that have done well recently to continue to do so in the short term. Momentum approaches can entail higher turnover and trading costs since the top stocks can often change. In the latest month, the strategy was also less exposed to the Momentum factor compared with Morningstar Category peers. This strategy has also displayed a tendency to hold more companies with high dividend or buyback yields than peers over recent years. Higher-yield stocks can provide dependable income, but also have their risks. Dividend payers may cut payouts, for instance, if their earnings fall. Compared with category peers, the strategy also had more exposure to the Yield factor in the most recent month. In addition, this strategy has not maintained a defensive tilt, demonstrated by low exposure to the quality factor. This means the fund avoids holding firms that are consistently profitable, growing, and have solid balance sheets. Such positions do not tend to provide much ballast for a portfolio. In recent months, the strategy also had less Quality factor exposure than its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in consumer cyclical and communication services relative to the category average by 10.3 and 5.9 percentage points, respectively. The sectors with low exposure compared to category peers are industrials and real estate, underweight the average by 6.5 and 5.5 percentage points of assets, respectively. The portfolio has 99 holdings and is similarly diversified as peers, with 15.5% of portfolio assets concentrated within the top 10 holdings. And finally, in terms of portfolio turnover, looking at year-over-year movements, 76% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Above Average

Process

VanEck’s  team is comparable to peers, resulting in an Average People Pillar rating. There are two managers listed on the fund: Peter Liao, Griffin Driscoll. Together, they manage a total of 13 strategies, with a Silver asset-weighted average Morningstar Medalist Rating, indicating the potential to deliver positive alpha relative to the category median in aggregate.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

Average

People

VanEck’s ownership structure and specialization make it unique among industry peers. The firm’s founding family and namesake still have control, and its product lineup still reflects its legacy as a specialist in niche market segments. VanEck earns an Average Parent Pillar rating. 

Founded by John van Eck in 1955, the firm staked its claim in the industry by capitalizing on burgeoning markets. Starting with the opening of Western Europe to U.S.-based investors in the wake of the Marshall Plan, VanEck’s largest and most successful products provide exposure to areas of the market that are off the beaten path, such as hard assets, emerging-markets debt, and below-investment-grade-rated corporate debt.

Through its history, VanEck has taken an opportunistic approach to product development. For instance, since 2018, VanEck has launched strategies that provide exposures ranging from international REITs to companies involved in video game development. Regardless of where their reach takes them, however, VanEck builds a case that the strategy will be relevant over the long term and that its risks must be easy to understand. However, not all its products catch on, and the firm has shuttered several offerings in the last decade. 

VanEck remains a privately held firm, wholly owned by CEO Jan van Eck and his family. Although this enables the firm to focus on the long term and the firm offers some employees participation in profits, the firm hasn’t used equity as a recruiting and retention tool and introduces some key-person risk in the executive suite.

Parent

Vaneck Morningstar SMID Moat ETF

SMOT tracks an index made up of two equally-weighted sub-portfolios, comprised of small- and mid-cap companies believed to have durable competitive advantages and attractive valuations.

Designed to provide broad exposure to the Style Box - All Cap Blend category of the market, the VanEck Morningstar SMID Moat ETF (SMOT) is a smart beta exchange traded fund launched on 10/04/2022.

Is VanEck Morningstar SMID Moat ETF (SMOT) a Strong ETF Right Now?

VanEck Morningstar Wide Moat ETF

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SMIDcap Stocks: 2024's Big Opportunity?

The VanEck Morningstar SMID Moat ETF leverages Morningstar's economic moat rating methodology to select small- and mid-cap stocks with sustainable competitive advantages. The ETF has attracted $292 million in total net assets since its launch in October 2022. The ETF offers exposure to a diverse range of sectors, focuses on attractively valued companies, and has the potential for robust long-term returns.

SMOT: A Good Idea In The Small/Mid-Cap Space

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By Patrick Schramm, ETF Strategist Since the beginning of 2023, equity markets have ripped despite the presence of what appeared to be multiple headwinds—the question now is, what could go wrong? In my numerous conversations with clients to start off 2024, one common theme sticks out—people want to talk about the resilient U.S.

The Resilient Bull: Dissecting the Market's Strengths and Vulnerabilities

By Coulter Regal, CFA, Product Manager Moat stocks once again dominated the S&P 500 in 2023, as the Moat Index surged 32.41% versus the S&P 500's 26.3% gain in 2023. U.S. equity markets ended 2023 on a high note in December with a year-end rally that led major U.S.

Moat Stocks' Reign Over the S&P 500 Continues

The VanEck Morningstar SMID Moat ETF applies the Morningstar Wide Moat methodology to small- and mid-cap stocks. Although the SMOT ETF's absolute performance has been modest, it has handily outperformed the iShares Russell 2000 ETF since its inception. Given my bullish outlook on small-cap stocks, I believe the SMOT ETF will outperform in 2024.

SMOT: Popular Strategy Applied To Small-Caps

By Brandon Rakszawski, Director of Product Management, and Coulter Regal, CFA, Product Manager The S&P 500 registered its best month in nearly a year and a half, but still could not keep pace with the Moat Index in November.

Moat Stocks Show Grit in November Rally

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VanEck Vectors Natural Resource ETF

VanEck Robotics ETF

VanEck Vectors Indonesia Index ETF

VanEck Vectors Israel ETF

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Vaneck Morningstar ESG Moat ETF

VanEck Morningstar Global Wide Moat ETF

VanEck Vectors Morningstar International Moat ETF

VanEck Vectors Uranium+Nuclear Energy ETF

VanEck Vectors Oil Services ETF

VanEck Commodity Strategy ETF

VanEck Rare Earth/Strategic Metals ETF

Vaneck Green Infrastructure ETF

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VanEck Vectors Russia Small-Cap ETF

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NEW YORK--(BUSINESS WIRE)--VanEck announced today the 2023 annual distributions per share for its VanEck® equity exchange-traded funds.

VanEck Announces Year-End Distributions for VanEck Equity ETFs

It's not that smaller stocks are in the red this year. As measured by the S&P MidCap 400 and the S&P SmallCap 600 indexes, smaller equities are in the green.

This Small-Stock ETF Could Have Big Things in Store

By Coulter Regal, CFA, Product Manager Mid-caps offer an attractive mix of characteristics from both larger and smaller cap stocks and are currently valued at a near 30% discount to their long-term average and an even greater relative discount to where large caps sit today.

Mid-cap Stocks: The Overlooked Sweet Spot

By Coulter Regal, CFA, Product Manager Despite a rough October for equities, there is optimism heading into yearend. In particular, moat stocks have a history of rebounding, so this may be an opportune time to invest in them.

Stage Set for Moat Stocks Rebound?

By Coulter Regal, CFA, Associate Product Manager The “Magnificent Seven*” mega-cap stocks have driven over 70% of the S&P 500's YTD returns. Despite being underweight these stocks, Morningstar's Moat Index has outperformed the S&P 500 YTD.

Moat Investing Rises Above Magnificent Seven Dominance

By Brandon Rakszawski, Director of Product Management, and Kendall Duncan, Product Analyst See which index constituents have been added/removed, reasons for removal, potential upcoming constituent additions, and the current weightings of index holdings.

SMOT ETF Quarterly Reconstitution 3Q2023

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Vanguard Mega Cap ETF

First Trust SMID Cap Rising Dividend Achievers ETF

Bull vs. Bear is a weekly feature where the VettaFi writers' room takes opposite sides for a debate on controversial stocks, strategies, or market ideas — with plenty of discussion of ETF ideas to play either angle. For this edition of Bull vs.

Bull vs Bear: Are the Best Equity Opportunities in SMIDcaps?

O'Shares US Small-Cap Quality Dividend ETF

Just about 10 “mega-cap” firms have driven more than 80% of the S&P 500's growth in 2023. For some, that's proven to be a source of robust returns, but that statistic also means heightened concentration risk for everyone.

The Case for Mid and Small-Cap Stocks Right Now

SMOT has an alluring concept, marrying up the resilience inherent in moaty players with the valuation benefits investors typically anticipate from smaller companies. VanEck Morningstar SMID Moat ETF is approaching its one-year milestone with mixed results as it has underperformed the S&P 500 since my two previous notes. There is an interesting factor story in its recently recalibrated portfolio, with meaningful quality exposure, yet insufficient for a Buy rating.

SMOT: Do Not Set Expectations Too High

While index ETFs are considered passive, they are not static. It pays to understand when a group of stocks are added or removed as part of a smart beta index ETF reconstitution.

Even Moats Need Reinforcements

Given the large small- and mid-cap stock universe and lack of analyst coverage, we believe a more selective approach may be a better choice than a broad-market exposure. We explore in this Q&A.

SMOT ETF: Question & Answer

By Brandon Rakszawski, Director of Product Management The strength of Morningstar's moat indexes lies in its forward-looking approach to selecting quality companies, as shown by its history of outperforming the S&P 500 over long holding periods. August was a volatile month for U.S. equity markets.

Charting the Moat Index's Long-Term Track Record

The first half of the year is officially complete, and this lopsided tech rally is possibly becoming one of the most hated bull markets in history. U.S. equities have refused to slow down despite debt ceiling angst, regional banking fears, continued tightening credit conditions, and a commercial real estate market teetering on the edge. In the face of these concerns, the Nasdaq registered its strongest first-half performance in 40 years with a gain of over 31%. Additionally, Apple, the world's most valuable company, closed above the $3 trillion market capitalization mark for the first time.

Half-Time Heroes: Moat Stocks Lead as Second Half Kicks Off

With the second half of 2023 just getting started, and with second-quarter earnings slated to kick off in earnest this week, now is an opportune time for registered investment advisors to consider fresh approaches to equity investing for client portfolios. Wide moat investing may just be what the doctor ordered.

Advisors: Time Is Now to Explore Wide Moat Investing

Kellogg

Medtronic

Tyler Technologies

U.S. Bancorp

With the right methodology, it's possible for advisors and investors to efficiently locate baskets of stocks  with the wide moat designation without the burden of paying up on valuation. Enter the VanEck Morningstar Wide Moat ETF (MOAT) and the VanEck Morningstar SMID Moat ETF (CBOE: SMOT).

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Wide Moats Equal Big Quality

Owing in part to the asset class's compelling growth prospects, small- and mid-cap stocks have long lured investors looking for more rapid upside potential than is offered by large-caps. Of course, there's a trade-off: Smaller stocks are usually riskier and more volatile than their large-cap counterparts.

SMOT Could Be Small-Cap Risk-Reducer

The benefits of wide moat investing are not a large-cap-only phenomenon.

News for Vaneck Morningstar SMID Moat ETF ETF (SMOT)