How the MOAT ETF Has Outperformed
VanEck’s Rakszawski talks economic moats and how investors can use them.
“Just like a castle has a moat to fend off enemies, businesses can build an economic moat to fend off competition, hopefully well into the future,” said Brandon Rakszawski, director of product management at VanEck.
In this episode of Talk ETFs, Rakszawski, whose firm is the issuer behind the VanEck Morningstar Wide Moat ETF (MOAT), sits down with etf.com senior analyst Sumit Roy to talk more about moats and how they can help investors generate superior returns.
Dictionary.com defines a moat as “a deep, wide ditch surrounding a castle, fort, or town, typically filled with water and intended as a defense against attack.”
But that’s not what investors are talking about when they refer to moats. Coined by legendary investor Warren Buffet, an economic moat is related to businesses and their competitive advantages.
Concepts like switching costs, brands, network effects and others are considered to be moats that can defend a company against competition, enabling it to earn outsized profits well into the future.
