MOAT ETF Sees $2.9B in Outflows as Underperformance Mounts
- With performance falling behind, some investors are abandoning the strategy.
- Despite the recent exodus, MOAT remains a sizable fund.
Investors are pulling back from the VanEck Morningstar Wide Moat ETF (MOAT), as the once high-flying fund continues to lag broad market benchmarks.
MOAT has seen $2.9 billion in net outflows year to date, making it the ETF with the 13th-largest outflows among all U.S.-listed funds in 2025. If the trend holds, this would mark only the second calendar year of outflows for the fund since its 2012 launch and, by far, the worst. For comparison, the previous record for annual redemptions came in 2015, when investors pulled $196 million.
MOAT Sentiment Shifts
Despite the recent exodus, MOAT remains a sizable fund with $12.8 billion in assets. But sentiment has clearly shifted, as the ETF’s performance has stumbled relative to the market.
In 2024, MOAT returned 10.7%, trailing the S&P 500’s 25% surge by a staggering 14.3 percentage points, the largest annual gap between the two since the fund’s inception. The underperformance has continued into 2025: MOAT is up 5.7% year to date versus 8.4% for the S&P 500, a 2.7-percentage-point shortfall.
That drag has erased what was once a meaningful lead over the broader market. Since its April 24, 2012, inception, MOAT is now up 467%, behind the S&P 500’s 491% total return over the same period. For much of its history, MOAT was ahead.
MOAT vs. S&P 500 Total Return
Source: Bloomberg
The fund tracks the Morningstar Wide Moat Focus Index, which selects companies deemed to have durable competitive advantages—so-called “economic moats”—and that are trading at attractive valuations based on Morningstar’s equity research.
While technically an index fund, MOAT’s reliance on Morningstar’s equity research means it functions more like an actively managed strategy in practice.
The “moat” concept was popularized by Warren Buffett, who has long argued that companies with strong competitive barriers are better positioned to compound long-term returns. But identifying those moats, and pricing them appropriately, requires subjective judgment.
Under the Hood
MOAT currently holds 55 stocks, including names like Estee Lauder Companies Inc. (EL), Boeing Co. (BA), Huntington Ingalls Industries Inc. (HII), Applied Materials Inc. (AMAT) and Allegion PLC (ALLE).
Notably, the fund is underweight the technology sector, with a 28% allocation versus 33% for the S&P 500. It also has only a 5% weighting in the communications services sector—home to companies like Meta Platforms Inc. (META) and Alphabet Inc. (GOOGL)—compared to almost 10% for the benchmark.
Instead, the fund has leaned heavily into healthcare, which makes up 20% of the portfolio, more than double the sector’s 9% weight in the S&P 500. That bet has backfired this year, with healthcare being the worst-performing sector so far.
MOAT also misses out on much of the “Magnificent Seven” trade. It owns just three of the seven megacap stocks—Microsoft Corp. (MSFT), Amazon.com Inc. (AMZN) and Alphabet—and is underweight even those relative to their index weights. The fund holds no exposure to Meta, Nvidia Corp. (NVDA), Apple Inc. (AAPL) or Tesla Inc. (TSLA).
MOAT’s strategy of picking attractively priced wide-moat companies has appeal on paper. But in a market dominated by mega-cap tech and growth stocks, the fund’s tilts have worked against it. With performance falling behind and exposure to key market leaders limited, some investors are abandoning the strategy.
