I own a few ASX exchange-traded funds (ETFs). But, like a guilty parent, I confess to having one clear favourite. I have written about it before, and probably will again. It is none other than the VanEck Vectors Wide Moat ETF (ASX: MOAT).
The VanEck Wide Moat ETF is an actively managed fund. This means that, unlike a passive index fund, it follows an active share selection methodology.
In this case, the ETF, according to its provider, intends to offer exposure to "attractively priced companies with sustainable competitive advantages". These are selected and periodically reviewed and rebalanced by Morningstar's equity research team.
An economic moat is a term coined by the legendary investor Warren Buffett. It refers to a company's intrinsic competitive advantage. An example would be the undisputed brand power of companies like Apple or Coca-Cola. Or the unavoidability of one of Transurban Group (ASX: TCL)'s toll roads.
So the Wide Moat ETF aims to select US shares with these kinds of characteristics. As of the fund's most recent update, some of its top holdings included Microsoft, Disney, Amazon and Adobe. All companies that I think most investors would agree with are high-quality shares.
Why the Wide Moat ETF is a winner
I like this idea in theory. But a fund also has to display some compelling performance figures to persuade me to part with my cash.
The Wide Moat ETF does indeed have some impressive numbers on the board. It was first launched back in June 2015 on the ASX. Since that day, it has delivered an average performance of 13.55% per annum.
By contrast, the US S&P 500 Index (SP: .INX) has delivered 11.75% per annum over that same period. The Wide Moat ETF has also outperformed the S&P 500 over the past five years as well, not an easy task. It's delivered an average of 14.05% per annum against the index's 13.16%.
So it's for this reason that the VanEck Vectors Wide Moat ETF is my favourite ETF investment, as well as being one of my favourite investments in my entire share portfolio. It's been a winner for me, and I don't see any reason why it won't keep on winning.
