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High Exposure to Wide Moat Companies

The idea of an economic moat refers to how likely companies are to keep competitors at bay for an extended period. We believe one of the keys to finding attractive long-term investments is buying companies that seek to stay one step ahead of their competitors.

 

We attempt to capture this characteristic, the strength and sustainability of a firm’s competitive advantage, with the economic moat rating.
 

 

The Wide Moat Effect

 
Efficient Scale

When a firm enjoys economies of scale in areas like manufacturing, sales and marketing, it can be pretty tough for a competitor to catch up.

Low-Cost Producer

The ability to produce products or services at a lower cost than competitors is an advantage that is especially potent in commodity industries

Intangible Assets such as Brand, Patents

Companies can generate above average profits when a brand or the government protects their products or services from competition.

High Customer Switching Costs

If you can make it tough for your customers to use a competitor, it is usually easy to increase prices year after year, which may lead to higher profits.

The Network Effect

This is a relatively rare, but potentially quite potent, source of competitive advantage, and often accrues by the first mover in an emerging technology.

Because a network's value increases as more people use it, the company that created the network can create a massive economic moat.

 
Source: Morningstar. Data as of 31/03/17. Indices are unmanaged and their returns assume reinvestment of dividends and, unlike mutual fund returns, do not reflect any fees or expenses associated with a mutual fund. It is not possible to invest directly in an index.
Portfolio Management

Andrew Acheson
Senior Vice President,
Portfolio Manager

Biography »

 

 


Paul Cloonan, CFA
Senior Vice President,
Portfolio Manager

Biography »


Learn more »

Fund Facts

Investment Universe: Emphasis on Russell 1000 Growth companies, typical market cap. of >U.S. €10bn

 

Benchmark: Russell 1000® Growth Index

 

Morningstar Categorytm: U.S. Large-Cap Growth Equity

 

Fund Inception: 11 July 2008

 

Domicile: Luxembourg