Andrew Lane: Within the Morningstar equity research department, we keep a close eye on the performance of the Wide Moat Focus Index, a collection of the most undervalued U.S. wide-moat rated stocks under our coverage. Typically, the strategy holds roughly 50 stocks, with the reconstitution and rebalancing process taking place four times per year. The index is important to us, as its construction represents the cross section of our differentiated economic moat methodology and our rigorous bottom-up valuation work.
In the first quarter of 2019, the Wide Moat Focus Index generated a 13.4% total return but modestly underperformed its benchmark, the Morningstar US Market Index, by 67 basis points. This comes on the heels of a very strong performance in 2018, during which the strategy outperformed its benchmark by 431 basis points. Since the index’s February 2007 inception date, it has beaten its benchmark by 358 basis points annually, an impressive long-term track record.
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Andrew Lane does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.