What a start the S&P/ASX 200 Index (ASX: XJO) is having to this week's trading today. After giving investors a five-out-of-five week of gains last week, the ASX 200 has again lifted this Monday. This has led to the ASX 200, and the exchange-traded funds (ETFs) that track it, higher by around 0.5%. But one ASX ETF is doing far better than that.
The VanEck Morningstar Wide Moat ETF (ASX: MOAT) has had a very pleasing year in 2023 so far, rising by almost 15.5% year to date and hitting several new all-time record highs along the way. The latest high has come just today.
At the time of writing, Wide Moat ETF units are trading at $111.49 each, up 1.64% so far. But earlier this morning, this ASX ETF hit a high of $111.89 per unit. That's both this ETF's new 52-week high and all-time high.
So why has this ETF outperformed the ASX 200, both today and over the year so far?
Well, the Wide Moat ETF is not an ETF that invests in ASX shares, despite being listed on our ASX share market. Instead, it is an actively-managed fund that tracks a basket of only US shares. Not just any US shares though. To qualify for this ETF's investment universe a company must display characteristics of a 'wide moat'.
A moat is a concept popularised by the legendary investor Warren Buffett. It refers to the intrinsic competitive advantage (or advantages) that most of the best companies in the world possess. This advantage is anything that helps a company fend off its competition (hence the moat).
It could be a strong and powerful brand, like the ones that Apple or Coca-Cola possess. It could be a cost advantage in an industry, perhaps best illustrated by the cheap groceries that Woolworths Group Ltd (ASX: WOW) can offer.
Another example would be possessing an asset that others are willing to pay to use, due to a lack of alternatives. The simplest example of this kind of moat would be the toll roads that Transurban Group (ASX: TCL) owns and operates.
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Wide Moat ETF lifts to new all-time ASX high
The Wide Moat ETF attempts to bandle a collection of companies together in its portfolio that all possess indications of a moat. Some of its top holdings include names like Meta Platforms, Adobe, Boeing, Walt Disney and Buffett's own Berkshire Hathaway.
So the performance of the US markets at the end of last week probably explains why this ETF is at another new all-time high today. Last Friday, the S&P 500 Index (SP: .INX) rose by an impressive 1.44%. Apple did even better, rising by 1.56%. Meta stock was up almost 2%, and Disney shares by more than 2%.
So it's not hard to see why the value of this ETF is also rising today.
The Wide Moat ETF does have a rather impressive history of delivering returns to its investors. As of 28 February, the fund has returned an average of 15.1% per annum over the past five years, and 14.65% per annum since its inception in 2015:
The VanEck Morningstar Wide Moat ETF charges a management fee of 0.49% per annum.
