I have long written about the VanEck Morningstar Wide Moat ETF (ASX: MOAT) and its place as a beloved holding in my personal ASX share portfolio. But what of its younger sibling, the VanEck Morningstar International Wide Moat ETF (ASX: GOAT)?
MOAT is an ASX exchange-traded fund (ETF) that has been around for just over ten years. Over this timespan, it has delivered some impressive returns to its investors, returning an average of 15.17% per annum since inception (as of 30 November).
This ETF works by holding a relatively concentrated portfolio of exclusively American stocks (usually between 40 and 60) that all show characteristics of possessing a wide economic moat.
A moat is the term first coined by legendary investor Warren Buffett. It describes an intrinsic competitive advantage that a company can possess. This advantage can come in a few different forms. It could be a strong brand that commands consumer loyalty. It could also be a low-cost advantage, a network effect, or selling a product that consumers find difficult to avoid buying.
Buffett himself has stated that he usually looks for companies that possess some kind of moat for Berkshire Hathaway's investment portfolio. It's always worked well for Buffett, and that same strategy seems to have worked well for the VanEck Morningstar Wide Moat ETF.
Some of MOAT's current holdings include Nike, Boeing, Salesforce, Adobe, Mondelez International, Alphabet, and Caterpillar.
But what of the International Wide Moat ETF?
MOATs and GOATs
Perhaps due to the success of its original MOAT fund, ETF provider VanEck launched the International Wide Moat ETF back in 2020.
This fund aims to extend the successful MOAT strategy to international markets, with the fund investing in companies from markets like Japan, the United Kingdom, Europe, and Canada. The United States is still in play, though, making up about 40% of GOAT's portfolio at present.
So while MOAT sticks to the United States, GOAT branches out, currently holding stocks like Yaskawa Electric Corp, Kubota Corp, GSK plc, and Roche Holdings. That's in addition to many of the US stocks listed above.
Unfortunately, though, GOAT's successful strategy doesn't seem to be a happy traveller. Whilst MOAT has returned a healthy 15.88% per annum over the past three years, and 14.79% per annum over the past five, GOAT hasn't kept up. It has returned just 11.53% per annum over the past three years. That drops to 10.62% per annum over five.
Those are still decent returns to be sure. But they pale against what the US-centric MOAT has delivered.
Foolish Takeaway
Warren Buffett has always focused on investing in the United States, and perhaps GOAT's underperformance shows us why. Until GOAT shows it has the potential to successfully replicate the wide moat investing strategy beyond the United States of America with consummate returns, I'll be sticking to MOAT.
