Market Vectors MS International Moat (MOAT)

(A Top Pick Jan 24/17. Up 27%.) An ETF that essentially tracks a MorningStar Wide MOAT index. He wants companies that have strong competitive advantages, which are identified by a Moat rating. Fees are relatively low. An excellent holding for somebody who is not wanting to do individual security analysis themselves. (See Top Picks.)

It uses the Morningstar MOAT methodology which is somewhat fundamental. They are looking for companies with an economic moat – high barriers to entry. He thinks of it as a fundamental play. It is not very diversified, however. It is holding US equities and some are the most liquid in the world. Rebalancing is not much of an issue. He is a fan of equal weighting. It has a 0.49% expense ratio.

(Top Pick Jan 24/17, Up 5%) An ETF of stocks with wide moats, preventing competitors coming in. Exposure to US companies with a strong competitive advantage.

Features a number of companies that MorningStar objectively and qualitatively will give a moat reading to. It has 3 ratings; wide, narrow and no moat. About 15% of their stocks have a moat. Primarily they are looking at companies that have a wide margin between their ROE and their cost of capital, and companies that can sustain that going forward. It owns 50 names and is rebalanced semi-annually. If looking for companies that have wide economic moats, which theoretically should outperform over the long-term, this is an excellent option.