$20,000 invested in the ASX MOAT ETF 5 years ago is worth how much?

One exchange-traded fund (ETF) that is popular with Australian investors is VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT).

With almost $1 billion in net assets, a lot of wealth has been put into this fund.

In fact, that’s more than what is invested in Myer Holdings Ltd (ASX: MYR) and Kogan.com Ltd (ASX: KGN).

But has it been a good investment? Let’s take a look at what a $20,000 investment five years ago would be worth today.

What is the ASX MOAT ETF?

Firstly, let’s take a look at what exactly the VanEck Vectors Morningstar Wide Moat ETF provides investors.

The fund manager, VanEck, describes the ASX MOAT as an ETF that gives “exposure to a diversified portfolio of attractively priced US companies with sustainable competitive advantages according to Morningstar’s equity research team.”

It then notes that the “wide moat ETF aims to provide investment returns before fees and other costs which track the performance of the Index.”

How are the holdings selected?

As it mentions above, this ETF puts together a group of ~54 companies with sustainable competitive advantages that are trading at attractive prices.

These companies will change periodically depending on the status of their competitive advantages or valuation.

VanEck notes that at each quarterly review, current index constituents that are ranked within the top 150% of the eligible universe based on current market price/fair value ratio are given preference for inclusion in the fund.

And from the remaining eligible securities, those with the lowest current market price/fair value ratios are included in the index sector cap.

This has ultimately led to the likes of Google parent Alphabet Inc (NASDAQ: GOOG), automatic test equipment designer Teradyne Inc (NASDAQ: TER), online giant Amazon.com Inc (NASDAQ: AMZN), and Warren Buffett’s Berkshire Hathaway Inc (NYSE: BRK.B) been included in the fund at present.

Big returns

The good news is that the ASX MOAT ETF’s investment focus on sustainable competitive advantages and fair valuations has delivered the goods for investors over the last five years.

In fact, over this period, the ETF has outperformed the market and delivered mouth-watering returns for investors.

Since this time in 2019, the ETF has achieved an average total return of approximately 16.4% per annum.

This means that if you had invested $20,000 into the ASX MOAT ETF five years ago, you would have compounded your way to almost $43,000 today. That’s more than double your original investment.

The post $20,000 invested in the ASX MOAT ETF 5 years ago is worth how much? appeared first on The Motley Fool Australia.

More reading

• 2 of my favourite ASX ETFs for Australian investors
• Why these strong ASX ETFs could be top long term picks
• 16% per annum: What is the VanEck Wide Moat ETF’s secret sauce?
• Looking for ASX growth shares? I rate these 2 as buys
• Which companies are in the VanEck Morningstar Wide Moat ETF (MOAT) portfolio?

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Berkshire Hathaway, and Kogan.com. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Teradyne. The Motley Fool Australia has recommended Alphabet, Amazon, Berkshire Hathaway, Kogan.com, and VanEck Morningstar Wide Moat ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.