MOAT: This Warren Buffett-style fund constantly beats the SPY ETF

The VanEck Morningstar Wide Moat (MOAT) ETF stock price has pulled back in the past few months as concerns about the market continued. The fund’s stock retreated to a low of $75 on Friday, lower than the year-to-date high of $84. It is hovering near the lowest level since June.

On Friday, I wrote about the Pacer US Cash Cows 100 ETF (COWZ), a fund made up of quality companies that Warren Buffett would love. The fund focuses on companies with a long history of growing their free cash flows (FCF). 

The VanEck Morningstar Wide Moat is another ETF that I believe Warren Buffett would love. For one, it focuses on companies with a moat in their industries. Buffett has long advocated for companies that have a wide competitive advantage against their peers.

The MOAT ETF tracks the Morningstar Wide Moat Focus Index, which tracks 51 companies. Some of the top constituents are companies like Alphabet, Veeva Systems, Comcast, Gilead Sciences, ICE, and Marketaxess Holdings.

A look at all these firms shows that they have a huge competitive advantage. Alphabet is the biggest search engine in the world while Gilead has a strong market share in the oncology division. 

Intercontinental Exchange (ICE) runs the most popular exchanges in the world, including the New York Stock Exchange. Salesforce is the biggest CRM company while Veeva Systems provides software solutions to the healthcare industry. Other firms like TransUnion, Ecolab, and Equifax also have a strong moat.

MOAT has a long track record of outperforming the SPDR S&P 500 ETF (SPY). Data shows that the five-star rated fund has done better than the fund since inception. Its average annual return in the past five years stands at 12.7% while the S&P 500 has risen by ~10.2%. It has had annual returns of ~13.6%, higher than S&P 500’s 12.64%.

The only risk for investing in MOAT right now is that technicals are not supportive. My view is that investors should buy into this weakness, possibly using the dollar cost average (DCA) approach. 

The daily chart shows that the MOAT ETF has been in a strong downward trend in the past few months. It has crossed the 23.6% Fibonacci Retracement level and moved below the 50 and 200-day Arnaud Legoux Moving Average (ALMA). 

The fund has dropped below the key support at $76.55, the highest point on February 2nd. Therefore, the short-term outlook for the fund is bearish, with the next level to watch being at $70.30.

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