When you're looking to add new S&P/ASX 200 Index (ASX: XJO) shares to your portfolio, one of the key factors to consider is how resilient these blue-chip companies are to competition.
As legendary investor Warren Buffett famously said, "In business, I look for economic castles protected by unbreachable moats."
By that, Warren Buffett is referring to large barriers to entry that make it unattractive for would be competitors to attempt to enter the same market space and steal some of the action.
So, which five ASX 200 shares have the some of the biggest moats?
Read on!
ASX 200 shares with deep moats
Speaking at the Pinnacle Investment Management Group Ltd (ASX: PNI) 2024 Investment Summit, Jolon Knight, investment specialist at Hyperion Asset Management said there was plenty of growth to find on the ASX.
"We do think that the funds of growth give you a unique opportunity to really invest in some of the world's best businesses that are just listed here in Australia." Knight said.
As for those companies with yawning moats that Warren Buffett would likely approve of, Knight listed five ASX 200 shares with "no credible competition".
"We look at companies that have no credible competition, such as WiseTech Global Ltd (ASX: WTC), ResMed Inc (ASX: RMD), Cochlear Ltd (ASX: COH), Pro Medicus Ltd (ASX: PME), and REA Group Ltd (ASX: REA)," he said.
Knight noted that Hyperion had held all five ASX 200 shares "for a very long period of time"
The fund added REA Group to its holdings in 2004.
That investment will have paid off very handsomely over the past 20 years. The REA Group share price has skyrocketed an eye-popping 23,047% since mid-August 2004. Meaning a $5,000 investment back then would be worth $115.74 million today.
"They're really high-quality businesses, monopolistic in nature, with no credible competitor," Knight said of all five ASX 200 shares.
"And then when we think about the actual footprint, where these companies are able to sell their products into, almost every single company has a global revenue base," he added.
What companies has Hyperion been buying lately?
As for the ASX 200 shares (and All Ords shares) Hyperion has added to its portfolio over the past eight months, Knight said the fund had bought Goodman Group (ASX: GMG), Lovisa Holdings Ltd (ASX: LOV) and Guzman Y Gomez (ASX: GYG).
"I think we own about 10% of GYG today, and that's in both the Australian Growth Companies Fund and the Small Growth Companies Fund," Knight said.
