VanEck today announced the launch of the VanEck Morningstar ESG Moat ETF (CBOE: MOTE), the newest addition to the firm’s lineup of moat investing ETFs as well as to VanEck’s growing lineup of sustainability-focused investment solutions.
MOTE is designed to provide investors with exposure to attractively priced U.S. companies that Morningstar believes possess long-term competitive advantages, or “moats”, that have been screened for ESG risks.
"Our flagship VanEck Morningstar Wide Moat ETF (MOAT) has been well-received by the investor and advisor marketplaces since its inception in 2012. In order to meet growing demand for more sophisticated ESG investing approaches, we’re very pleased to be introducing MOTE, a natural progression of both our moat and ESG-focused efforts,” said Brandon Rakszawski, Senior ETF Product Manager with VanEck. “ESG risks are, after all, business risks. Being able to focus on U.S. companies with both sizable moats and reduced ESG concerns relative to their peers makes MOTE a potentially powerful addition to a core equity portfolio.”
MOTE seeks to track the Morningstar® US Sustainability Moat Focus Index℠ (the “Index”), which targets a select group of wide moat companies that, according to Morningstar’s equity research team, are attractively priced. Morningstar’s extensive Sustainalytics ESG risk analysis is used to screen for companies that are better managing financially material ESG risks relative to peers as well as exclude companies involved in products widely viewed as controversial.
“We are looking forward to expanding on our longstanding, successful collaboration with VanEck to offer our unique index approaches to help benefit long-term investors,” said Ron Bundy, President of Morningstar Indexes. “The Morningstar® US Sustainability Moat Focus Index℠ helps investors tap into ESG opportunities in the market by using Morningstar’s equity research ratings in concert with ESG insights from Sustainalytics. It offers an added sustainability lens through our ESG Risk Rating on top of our unique Economic Moat index methodology that has demonstrated its value over the past 15 years.”
“We’re excited to continue working with Morningstar, which remains a leader in equity research and innovative ESG analytics,” added Rakszawski.
MOTE joins a suite of moat-style investing strategies from VanEck that also includes the $6.7 billion (as of 9/30/2021) VanEck Morningstar Wide Moat ETF (MOAT), the international equity-focused VanEck Morningstar International Moat ETF (MOTI), and the VanEck Morningstar Global Wide Moat ETF (GOAT).
VanEck considers ESG factors integral to its investment philosophy and is a 2017 signatory to the Principles for Responsible Investment (PRI). The firm recognizes that companies with strong ESG practices are more likely to be more competitive and successful over the medium to long term. The launch of MOTE closely follows the introduction of the VanEck HIP Sustainable Muni ETF (SMI), the first ETF designed to offer sustainable municipal bond exposures, and the VanEck Environmental Sustainability Fund (I Shares: ENVIX).
VanEck has a history of looking beyond the financial markets to identify trends that are likely to create impactful investment opportunities. We were one of the first U.S. asset managers to offer investors access to international markets. This set the tone for the firm’s drive to identify asset classes and trends – including gold investing in 1968, emerging markets in 1993, and exchange traded funds in 2006 – that subsequently shaped the investment management industry.
Today, VanEck offers active and passive strategies with compelling exposures supported by well-designed investment processes. As of August 31, 2021, VanEck managed approximately $81.1 billion in assets, including mutual funds, ETFs and institutional accounts. The firm’s capabilities range from core investment opportunities to more specialized exposures to enhance portfolio diversification. Our actively managed strategies are fueled by in-depth, bottom-up research and security selection from portfolio managers with direct experience in the sectors and regions in which they invest. Investability, liquidity, diversity, and transparency are key to the experienced decision-making around market and index selection underlying VanEck’s passive strategies.
Since our founding in 1955, putting our clients’ interests first, in all market environments, has been at the heart of the firm’s mission.
ESG investing is qualitative and subjective by nature, and there is no guarantee that the factors utilized by VanEck or any judgment exercised by VanEck will reflect the opinions of any particular investor. Information regarding responsible practices is obtained through third-party reporting, which may not be accurate or complete, and VanEck is dependent on such information to implement the investment strategy. Socially responsible norms differ by region. There is no assurance that the socially responsible investing strategy and techniques employed will be successful.
The Morningstar US Sustainability Moat Focus Index was created and is maintained by Morningstar, Inc. and targets stocks with low-to-medium ESG risk and Morningstar Economic Moat Ratings of wide trading at the lowest price/fair value ratios. Moat ratings and fair value estimates are determined through independent research conducted by the Morningstar Equity Research team. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and governed by the U.S. Securities and Exchange Commission.
The Morningstar Economic Moat Rating is subjective in nature and should not be used as the sole basis for investment decisions. Moat Ratings are based on Morningstar analysts’ current expectations about future events and therefore involve unknown risks and uncertainties that may cause Morningstar’s expectations not to occur or to differ significantly from what was expected. Morningstar does not represent the Morningstar Economic Moat Rating to be a guarantee, nor should it be viewed as an assessment of a security’s creditworthiness.
Morningstar, Inc. does not sponsor, endorse, issue, sell, or promote the VanEck Morningstar ESG Moat ETF, VanEck Morningstar Wide Moat ETF, VanEck Morningstar International Moat ETF, or VanEck Morningstar Global Wide Moat ETF and bears no liability with respect to the ETFs or any security. Morningstar® is a registered trademark of Morningstar, Inc. The Morningstar® US Sustainability Moat Focus IndexSM is a service mark of Morningstar, Inc. and has been licensed for use for certain purposes by VanEck.
The Fund’s ESG strategy could cause it to perform differently compared to funds that do not have an ESG focus. The Fund’s ESG strategy may result in the Fund investing in securities or industry sectors that underperform other securities or underperform the market as a whole. The companies included in the US Sustainability Moat Focus Index may differ from companies included in other indices that use similar ESG screens. The Fund is also subject to the risk that the companies identified by the Index provider do not operate as expected when addressing ESG issues. Additionally, the Index provider’s proprietary valuation model may not perform as intended, which may adversely affect an investment in the Fund. Regulatory changes or interpretations regarding the definitions and/or use of ESG criteria could have a material adverse effect on the Fund’s ability to invest in accordance with its ESG strategy.
An investment in the VanEck Morningstar ESG Moat ETF may be subject to risks which include, among others, ESG investing strategy risks, investing in equity securities, consumer discretionary, financials, industrials and information technology sectors, medium-capitalization companies, market, operational, high portfolio turnover, index tracking, authorized participant concentration, new fund, absence of prior active market, trading issues, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversification and concentration risks, which may make these investments volatile in price or difficult to trade. Medium-capitalization companies may be subject to elevated risks.
An investment in the VanEck Morningstar Wide Moat ETF (MOAT), VanEck Morningstar International Moat ETF (MOTI) and VanEck Morningstar Global Wide Moat ETF (GOAT) (the "Funds") may be subject to risks which include, among others, investing in the health care, consumer discretionary, consumer staples, industrials, telecommunications, information technology, financial services, medium-capitalization companies, equity securities, market, operational, high portfolio turnover, index tracking and data, emerging market issuers, special risk considerations of investing in Chinese, European and Asian issuers, depositary receipts, cash transactions, underlying fund, new fund, authorized participant concentration, no guarantee of active trading market, trading issues, replication management, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversification, and concentration risks, which may make these investments volatile in price or difficult to trade. Medium-capitalization companies may be subject to elevated risks. For a more complete description of these and other risks, please refer to each Fund’s prospectus.
VanEck HIP Sustainable Muni ETF (SMI):
The Fund's strategy of investing in municipal debt securities of issuers promoting sustainable development may limit the types and number of investments available to the Fund or cause the Fund to invest in securities that underperform the market as a whole. As a result, the Fund may underperform funds that do not have a sustainable investing strategy or funds with sustainable investing strategies that do not employ HIP Ratings. In addition, the Fund relies on the Data Provider for the identification of issuers that promote sustainable development based on their HIP Ratings; however, there can be no guarantee that the Data Provider's methodology will align with the Fund's investment strategy or desirable issuers can be correctly identified. Moreover, SDGs 9, 11 and 12 may be modified or abandoned in the future and there can be no guarantee that the Fund will be able to continue to use HIP Ratings or find an appropriate substitute ratings system.
An investment in the VanEck HIP Sustainable Muni ETF (SMI) may be subject to risks which include, among others, risks related sustainable impact investing strategy, municipal securities, credit, interest rate, call, data, California, New York, education bond , health care bond, housing bond, transportation bond, management, operational, authorized participant concentration, absence of prior active market, trading issues, market, fund shares trading, premium/discount and liquidity of fund Shares, non-diversified, state concentration risks all of which may adversely affect the Fund. Municipal bonds may be less liquid than taxable bonds. There is no guarantee that the Fund's income will be exempt from federal, state or local income taxes, and changes in those tax rates or in alternative minimum tax rates or in the tax treatment of municipal bonds may make them less attractive as investments and cause them to lose value. Capital gains, if any, are subject to capital gains tax. The Fund's assets may be concentrated in a particular sector and may be subject to more risk than investments in a diverse group of sectors.
VanEck Environmental Sustainability Fund (I Shares: ENVIX):
Companies that promote positive environmental policies may not perform as well as companies that do not pursue such goals. Issuers engaged in environmentally beneficial business lines may be difficult to identify and investments in them maybe volatile. Environmentally-focused investing is qualitative and subjective by nature, and there is no guarantee that the factors utilized by the Adviser or any judgment exercised by the Adviser will reflect the opinions of any particular investor. Information regarding responsible practices is obtained through voluntary or third-party reporting, which may not be accurate or complete, and the Adviser is dependent on such information to evaluate a company’s commitment to, or implementation of, responsible practices.
You can lose money by investing in the VanEck Environmental Sustainability Fund (I Shares: ENVIX). Any investment in the Fund should be part of an overall investment program, not a complete program. An investment in the Fund may be subject to risks which include, among others, investing in derivatives, equity securities, emerging market securities. environmental-related securities, foreign currency transactions, foreign securities, investments in other investment companies, management, market, new fund risk, non-diversification, operational, sectors, small and medium capitalization companies, special purpose acquisition companies. Small- and medium-capitalization companies may be subject to elevated risks.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of the Fund carefully before investing. To obtain a prospectus and summary prospectus, which contains this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
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