Which is a better investment, Riverrun or Winterfell?
The castle is situated at the end of the point of land where the Tumblestone flows into the Red Fork of the Trident. The rivers form two sides of a triangle, and when danger threatens, the Tullys open their sluice gates upstream to create a wide moat on the third side …
A Game of Thrones, George R.R. Martin
In A Game of Thrones Jaime Lannister’s army defeats the Tully forces in the Riverlands and captures the heir – but they are unable to take the castle Riverrun. The wide moat stops them. Jaime doesn’t do as well in his next battle in the Whispering Woods and is taken prisoner by the Starks. Soon after he has his hand chopped off. It doesn’t turn out well for the Starks either. Their castle, Winterfell doesn’t have a moat and they lose it the first time it is attacked.
When you play the game of thrones you win or you die. There is no middle ground. Playing the game of money is not as dangerous but you still want to protect yourself. Like the Tullys you want to have a wide moat between your estate and any marauders who can take away your wealth.
Investing with a wide moat is investing in companies with structural barriers that protect profits and defend against competition. An example is American Express whose wide moat has been built up over many years by assembling a base of big-spending cardholders by offering exceptional rewards and services. These affluent customers are attractive to merchants, who willingly pay higher discount fees to American Express. In turn, high discount fees fund the company’s rewards programs, making the company’s offerings more appealing to cardholders and completing a virtuous circle. American Express’ closed-loop network is its wide moat.
The wide moat metaphor for investing was created by Warren Buffet when explaining his investment philosophy. Morningstar® has adopted this concept in its equity research and assigns Economic Moat™ ratings to companies. The companies with the strongest structural barriers are described as having ‘Wide Moats’. Morningstar also assigns ‘Narrow Moat’ and ‘No Moat’ ratings.
VanEck has partnered with Morningstar to leverage its forward-looking Moat investing philosophy across equity markets.
We offer two international equity ETFs that focus on Wide Moats and Value by utilising Morningstar’s valuation methodology to identify Wide Moat companies trading at an attractive price/fair value ratio.
VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT) – Access a high conviction portfolio of at least 40 attractively priced US ‘Wide Moat’ companies.
VanEck Vectors Morningstar World ex Australia Wide Moat ETF (ASX: GOAT) – Access a high conviction portfolio of at least 50 attractively priced international ‘Wide Moat’ companies.
We also offer an Australian equity income ETF that focuses on high dividend, quality companies based on Morningstar’s Economic MoatTM rating.
VanEck Vectors Morningstar Australian Moat Income ETF (ASX: DVDY) – Invest in Australian companies with wide and narrow Economic Moats™.