Overall, moat companies, companies with structural competitive advantages, benefited from the election of Donald Trump. “The healthcare and banking sectors in particular breathed a sigh of relief,” said Uwe Eberle, Head of International Business Development and Distribution at VanEck. Pharma giants such as Amgen, McKesson, and AmerisourceBergen struggled with the prospects of potentially higher regulation and price controls under a Clinton administration. They recovered significantly after the election after their stocks had posted unimpressive returns throughout the week before. The banking sector, which also stands to benefit from potentially reduced regulations and higher interest rates under Trump, saw a boost as well, led by Wells Fargo with returns of more than 13 percent in the two days following the election. U.S. Moats Benefit from Election Results.
Losses for Tech Companies
Uncertainty over immigration and trade policy affected the technology sector in particular. Tech companies rely on skilled workers from outside the U.S. and have significant business ties to Mexico and Latin America. Stocks like Amazon.com, Western Union, and Salesforce.com were heavily sold in the immediate aftermath of the election. Outside the technology sectors, Starbucks was among the negatively affected stocks.
The VanEck Vectors Morningstar US Wide Moat UCITS ETF is the first ETF in Europe to provide exposure to U.S. companies with a Morningstar® Economic MoatTM Rating of Wide. The underlying index developed by Morningstar is based on the idea of economic moats, i.e. long-term structural advantages that allow a company to withstand competition. The Morningstar Wide Moat Focus Index has outperformed the broader U.S. equity market since its inception. Year to date, the index has outperformed the S&P 500 Index by 12.43%.
(Data as of 15.11.2016)
VanEck offers intelligently designed investment strategies that take advantage of targeted market opportunities. Founded in 1955, VanEck was a pioneer in global investing with a history of placing clients’ interests first in all market environments. The firm continues this tradition by offering active and ETF portfolios in hard assets, emerging markets, fixed income, and other assets classes.
The Morningstar® Wide Moat Focus IndexSM was created and is maintained by Morningstar, Inc. Morningstar, Inc. does not sponsor, endorse, issue, sell or promote the VanEck Vectors Morningstar US Wide Moat UCITS ETF and bears no liability with respect to that ETF. The index provides exposure to companies with a Morningstar Economic Moat Rating of “wide” that are trading at the lowest current market price/fair value ratios. Moat Ratings and fair value estimates are determined by the Morningstar Equity Research Team.