Title: ETF Portfolio Update: June 2026
Show: Compounding Quality (Substack, paid post — compoundingquality.net)
Guest: Pieter Slegers / Team Compounding Quality (author; signed "Team Compounding Quality")
Date: 2026-06-25
URL: https://www.compoundingquality.net/p/etf-portfolio-update-june-2026
Length: written post — no timestamps
Note: Paid-subscriber post captured via Stephen's logged-in session. Body text verbatim; UI chrome removed. Charts noted inline as [Image — ...]. The SMOT holdings/sector tables and the two ETF-portfolio weight, performance and transaction sheets are published as images and are transcribed below as [Table image — ...] blocks. The portfolio ETFs are named in the charts but their tickers are NOT given in the post — only SMOT, VB and IUSN are stated as tickers, so no others are inferred here.

You want to invest in companies with a wide moat.

But you know what's even better? Finding a small company with a wide moat.

Let's look at how you can do this via ETF investing.

Moats Matter

Capitalism is brutal.

When a company starts making a lot of money, it usually attracts competition.

In most cases, it means margins and profits go down for everyone.

That's called reversion to the mean.

But sometimes... This is not the case.

Reversion to the mean doesn't take place when a company has a durable competitive advantage (moat).

[Image — moat illustration]

A moat puts a company in a superior business position.

This allows the business to maintain and increase its profit margin and market share.

It's the most important thing if you're going to be a long-term investor.

Morningstar rates companies based on their economic moat.

There are 3 categories:

Wide moat: A durable competitive advantage expected to last 20 years or more

Narrow moat: A competitive advantage expected to last 10-20 years

No moat: Either no advantage or one that will be gone quickly

The wider the moat, the better.

Moat Sources

In general, there are 5 different moat sources:

Switching costs
What? It's hard for a customer to switch to a competitor
Example? FICO scores. Banks have built their automated loan approval systems around them, and switching to a competitor means massive operational risk for no real advantage

Intangible assets
What? Brands, patents, or regulatory licenses that allow the company to charge more than competitors
Example? Hermes. A competitor can make a similar bag, but they'll never have the prestige that allows Hermes to consistently raise prices without losing demand.

Network effects
What? As the business gets more customers, it becomes more valuable to everyone involved.
Example? Visa is a classic example. Consumers use Visa because every merchant accepts it. Merchants accept Visa because every consumer carries it.

Cost advantages
What? Allow a business to produce goods or deliver services at a lower cost than everyone else.
Example? Costco buys in bulk, and passes the cost savings to customers, which makes the customers more loyal, and drives higher volumes, which allows Costco to lower prices even more.

Efficient scale
What? Happens when a market is too small for it to make sense for competitors to enter.
Example? Railroads like Union Pacific have this kind of moat. Building a new coast-to-coast rail network would require hundreds of billions of dollars in land rights and infrastructure, only to split an already mature market.

[Image — the five moat sources. Source: Morningstar]

Moats Outperform

I hope you are convinced by now that companies with a wide moat outperform.

But does a moat really matter for an investor like you?

The answer is very clearly yes.

Since 2008, the Morningstar Wide Moat Index has beaten the US Market by 4% a year.

[Image — Wide Moat Index versus the US market. Source: Morningstar]

Size Matters

Another thing that makes a difference in investing?

Size.

Over time, smaller companies tend to outperform large ones.

[Image — small caps versus large caps]

The Size Problem

At Compounding Quality we have a serious size problem.

But don't get me wrong... It's not what you think it is.

The larger a company gets, the harder it is to grow.

Let's look at a hypothetical example.

Company A:

Generates $50 million in revenue.

To grow 20%, it needs to find $10 million in new sales.

That could be just a few new enterprise contracts or expanding into one new state.

Company B:

Generates $400 billion in revenue (similar to Apple).

To grow 20%, it needs to find $80 billion in new sales.

That's a huge challenge. iPads and Macs combined generated $62 billion in revenue last year. Apple would have to invent an entirely new category bigger than both to grow by 20%.

Warren Buffett has talked about size being a disadvantage for decades.

In 1995 he said:

"The giant disadvantage we face is size: In the early years, we needed only good ideas, but now we need good big ideas,"

Berkshire has nearly quadrupled its revenue in the past 20 years.

But the revenue growth rate is slowing down:

[Image — Berkshire revenue growth. Source: Fiscal.ai]

To summarize:

Companies with a wide moat outperform on average by 4% per year

Small companies outperform the market by 3% per year

Wouldn't it be interesting to buy an ETF that has both characteristics?

The good news is that you can!

ETF of the Month (Spotlight): VanEck Morningstar SMID Moat ETF (SMOT)

Key Information

Name: VanEck Morningstar SMID Moat ETF

Ticker: SMOT

ISIN: US92189H7301

Total Expense Ratio: 0.49%

Physical/Synthetic ETF: Physical

What?

The ETF invests in companies with 3 characteristics:

Strong small and medium-sized businesses

Wide competitive advantage

Selling at a discount

But how does this work in practice?

The ETF starts from the Morningstar US Small-Mid Cap Index.

Within this index, it only keeps companies with a "Wide" or "Narrow" economic moat.

Then it checks two things:

Is the stock performing well (drop the ones with bad momentum)?

How cheap is the company?

Finally, the ETF buys the best-priced companies (115 in total).

Why?

We already know that both smaller companies and companies with a moat tend to outperform over time.

But this strategy could be particularly interesting right now.

Today, smaller companies look very attractively valued compared to large caps:

[Table image — "Valuations Create an Attractive Entry Point": SMID Cap forward PE relative to Large Cap forward PE, January 2004 - March 2026. The ratio now stands at 0.87 against a long-run average of 1.15, having fallen sharply after 2021 from a range that was mostly between 1.1 and 1.4 for two decades. Source: VanEck]

On top of that, small companies are way less covered than large ones.

This offers opportunities for rational investors.

[Table image — "U.S. Equity Market Cap by Count" (as of March 2026): small-cap stocks 51%, mid-cap 36%, large-cap 13% of securities by count. "Average Analyst Coverage": SMID cap stocks 11 analysts per security versus 26 for the S&P 500 Index. Source: Morningstar, FactSet]

Sector Split

Here's the sector breakdown of the ETF.

The three largest sectors are Information Technology (18.2%), Health Care (18.1%) and Industrials (15.8%).

[Table image — SMOT sector weightings (% of net assets): Information Technology 18.2; Health Care 18.1; Industrials 15.8; Materials 10.4; Consumer Discretionary 9.4; Financials 8.0; Consumer Staples 7.8; Energy 4.5; Utilities 2.7; Real Estate 2.6; Other/Cash 2.6. Source: VanEck]

Top Holdings

Here are the top 10 holdings of SMOT:

[Table image — SMOT top 10 holdings (ticker / holding / % of net assets / market value US$):
CCL Carnival Corp Ltd 1.51 / 4,995,167
AYI Acuity Brands Inc 1.46 / 4,825,918
MAS Masco Corp 1.46 / 4,809,113
GNTX Gentex Corp 1.45 / 4,797,325
XYZ Block Inc 1.42 / 4,676,966
TECH Bio-Techne Corp 1.39 / 4,598,408
RPRX Royalty Pharma Plc 1.39 / 4,585,542
ABNB Airbnb Inc 1.37 / 4,535,474
NCLH Norwegian Cruise Line Holdings Ltd 1.36 / 4,506,468
BIIB Biogen Inc 1.35 / 4,458,434
Source: VanEck]

ETF Portfolio Update: June 2026

Now let's dive in Our ETF Portfolio Update.

Our Portfolio is a great mix of ETFs that should be able to outperform in the long term.

We use multiple factors that tend to do well:

Quality: Only invest in companies that have already won
Size: The smaller the better
Multifactor: Quality, size, value & momentum
Emerging Markets: Small exposure to Emerging Markets

Let's now dive into the ETF Portfolio itself.

You have 24/7 access to the ETF Portfolio here: ETF Portfolio

Please note there's a portfolio for Americans.
And another one for non-Americans.

Why?

If you live in the US, you can't buy non-US ETFs.

And if you live outside the US, you can't buy US ETFs.

American ETF Portfolio

The American ETF Portfolio is invested in these ETFs:

[Table image — "Weight" pie chart, American ETF Portfolio:
Vanguard Small-Cap ETF 21.8%; WisdomTree Emerging Markets Multifactor Fund 19.8%; Invesco S&P 500 Equal Weight ETF 17.0%; VanEck Morningstar Wide Moat ETF 11.1%; Tema Durable Quality ETF 10.8%; Invesco S&P MidCap Quality ETF 10.4%; iShares MSCI USA Min Vol Factor ETF 9.0%. (Some labels truncated in the source image; no tickers given in the post.)]

The performance per position looks as follows:

[Table image — "Performance Portfolio" bar chart, American ETF Portfolio (values read from the chart):
Vanguard Small-Cap ETF ~+67%; WisdomTree Emerging Markets Multifactor Fund ~+51%; Invesco S&P 500 Equal Weight ETF ~+29%; VanEck Morningstar Wide Moat ETF ~+27%; Tema Durable Quality ETF ~+24%; Invesco S&P MidCap Quality ETF ~+19%; iShares MSCI USA Min Vol Factor ETF ~+3%]

The return per transaction:

[Table image — American ETF Portfolio, every transaction (date / ETF / quantity / price / value / current stock price / current value / profit-loss / %):
10/13/2023 Invesco S&P 500 Equal Weight ETF 3.56 @ $140.3 = $499.47; now $209.91 -> $747.28 (+$247.81, +49.62%)
11/10/2023 VanEck Morningstar Wide Moat ETF 6.80 @ $73.5 = $499.80; now $101.20 -> $688.16 (+$188.36, +37.69%)
12/15/2023 Vanguard Small-Cap ETF 2.35 @ $212.8 = $500.01; now $297.10 -> $698.19 (+$198.18, +39.63%)
1/19/2024 Invesco S&P MidCap Quality ETF 5.59 @ $89.4 = $499.75; now $111.03 -> $620.66 (+$120.91, +24.19%)
2/9/2024 WisdomTree Emerging Markets Multifactor Fund 19.72 @ $25.4 = $500.89; now $40.27 -> $794.12 (+$293.24, +58.54%)
3/25/2024 Vanguard Small-Cap ETF 2.23 @ $224.6 = $500.77; now $297.10 -> $662.53 (+$161.76, +32.30%)
4/26/2024 VanEck Morningstar Wide Moat ETF 5.83 @ $85.8 = $500.10; now $101.20 -> $590.00 (+$89.90, +17.98%)
5/31/2024 Invesco S&P 500 Equal Weight ETF 3.05 @ $164.0 = $500.08; now $209.91 -> $640.23 (+$140.15, +28.03%)
6/21/2024 WisdomTree Emerging Markets Multifactor Fund 18.07 @ $27.7 = $500.00; now $40.27 -> $727.68 (+$227.68, +45.54%)
7/26/2024 Invesco S&P MidCap Quality ETF 5.16 @ $96.9 = $499.80; now $111.03 -> $572.91 (+$73.12, +14.63%)
10/18/2024 Vanguard Small-Cap ETF 2.06 @ $242.7 = $500.00; now $297.10 -> $612.03 (+$112.02, +22.40%)
11/15/2024 WisdomTree Emerging Markets Multifactor Fund 18.62 @ $26.9 = $500.13; now $40.27 -> $749.83 (+$249.69, +49.93%)
3/7/2025 Tema Durable Quality ETF 15.41 @ $32.45 = $500.05; now $41.20 -> $634.89 (+$134.84, +26.96%)
4/25/2025 iShares MSCI USA Min Vol Factor ETF 5.51 @ $90.70 = $499.76; now $94.17 -> $518.88 (+$19.12, +3.83%)
7/7/2025 Invesco S&P 500 Equal Weight ETF 2.71 @ $184.75 = $500.00; now $209.91 -> $568.09 (+$68.09, +13.62%)
8/8/2025 Tema Durable Quality ETF 14.74 @ $33.92 = $500.00; now $41.20 -> $607.31 (+$107.31, +21.46%)
2/20/2026 Vanguard Small-Cap ETF 1.80 @ $277.32 = $500.00; now $297.10 -> $535.66 (+$35.66, +7.13%)
3/30/2026 iShares MSCI USA Min Vol Factor ETF 5.45 @ $91.78 = $500.00; now $94.17 -> $513.02 (+$13.02, +2.60%)
As at 6/22/2026 — final value $11,481.46; CAGR 14.8%]

Non-American ETF Portfolio

The Non-American ETF Portfolio is currently invested in these ETFs:

[Table image — "Weight (%) per ETF" pie chart, Non-American ETF Portfolio:
21.4% (label truncated in the source image); iShares MSCI World Small Cap 18.1%; iShares Core MSCI Emerging Markets 18.0%; iShares Edge MSCI World (Multifactor) 15.8%; iShares S&P 500 Equal Weight 13.9%; VanEck Morningstar Global Wide Moat 12.9%. (Two labels begin "iShares Edge MSCI World" — the Multifactor and the Minimum Volatility UCITS ETFs — and cannot be told apart from the image.)]

The performance per position looks like this:

[Table image — "Performance Portfolio" bar chart, Non-American ETF Portfolio (values read from the chart):
iShares Core MSCI Emerging Markets ~+52%; iShares Edge MSCI World Multifactor ~+52%; iShares MSCI World Small Cap ~+33%; iShares S&P 500 Equal Weight ~+32%; VanEck Morningstar Global Wide Moat ~+17%; iShares Edge MSCI World Minimum Volatility UCITS ETF ~+9%]

Here's the return per transaction:

[Table image — Non-American ETF Portfolio, every transaction (date / ETF / quantity / price / value / current price / current value / profit-loss / %):
10/13/2023 iShares S&P 500 Equal Weight 101.00 @ EUR4.95 = EUR499.95; now EUR7.64 -> 771.64 (+271.69, +54.34%)
11/10/2023 iShares MSCI World Small Cap 89.00 @ EUR5.62 = EUR500.18; now EUR9.10 -> 809.59 (+309.41, +61.86%)
12/15/2023 VanEck Morningstar Global Wide Moat 21.20 @ EUR23.58 = EUR499.90; now EUR30.54 -> 647.51 (+147.61, +29.53%)
1/19/2024 iShares Edge MSCI World Multifactor 55.13 @ EUR9.07 = EUR500.03; now EUR15.78 -> 869.95 (+369.92, +73.98%)
2/9/2024 iShares Core MSCI Emerging Markets 17.23 @ EUR29.02 = EUR500.01; now EUR50.73 -> 874.08 (+374.06, +74.81%)
3/25/2024 VanEck Morningstar Global Wide Moat 19.80 @ EUR25.25 = EUR499.95; now EUR30.54 -> 604.75 (+104.80, +20.96%)
4/26/2024 iShares MSCI World Small Cap 78.48 @ EUR6.37 = EUR500.00; now EUR9.10 -> 713.90 (+213.90, +42.78%)
5/31/2024 iShares S&P 500 Equal Weight 87.00 @ EUR5.76 = EUR501.12; now EUR7.64 -> 664.68 (+163.56, +32.64%)
6/21/2024 iShares Core MSCI Emerging Markets 15.53 @ EUR32.20 = EUR500.07; now EUR50.73 -> 787.84 (+287.77, +57.55%)
7/26/2024 iShares Edge MSCI World Multifactor 46.73 @ EUR10.70 = EUR500.01; now EUR15.78 -> 737.40 (+237.39, +47.48%)
10/18/2024 iShares MSCI World Small Cap 73.00 @ EUR6.85 = EUR500.05; now EUR9.10 -> 664.04 (+163.99, +32.80%)
11/14/2024 iShares Edge MSCI World Multifactor 43.86 @ EUR11.40 = EUR500.00; now EUR15.78 -> 692.11 (+192.11, +38.42%)
3/7/2025 VanEck Morningstar Global Wide Moat 16.95 @ EUR29.50 = EUR500.03; now EUR30.54 -> 517.70 (+17.67, +3.53%)
4/25/2025 iShares Edge MSCI World Minimum Volatility UCITS ETF 8.00 @ EUR62.63 = EUR501.04; now EUR72.74 -> 581.92 (+80.88, +16.14%)
7/7/2025 iShares S&P 500 Equal Weight 75.64 @ EUR6.61 = EUR500.00; now EUR7.64 -> 577.91 (+77.91, +15.58%)
8/8/2025 iShares Edge MSCI World Minimum Volatility UCITS ETF 8.02 @ EUR62.32 = EUR500.00; now EUR72.74 -> 583.60 (+83.60, +16.72%)
10/30/2025 iShares Core MSCI Emerging Markets 12.84 @ EUR38.94 = EUR500.00; now EUR50.73 -> 651.39 (+151.39, +30.28%)
2/20/2026 iShares MSCI World Small Cap 59.45 @ EUR8.41 = EUR500.00; now EUR9.10 -> 540.81 (+40.81, +8.16%)
3/30/2026 iShares Edge MSCI World Minimum Volatility UCITS ETF 6.60 @ EUR75.72 = EUR500.00; now EUR72.74 -> 480.32 (-19.68, -3.94%)
As at 6/22/2026 — final value 12,771.13; CAGR 18.7%]

Overall, our Non-American ETF Portfolio is currently slightly outperforming the American one:

[Table image — paired performance by matched ETF (American / Non-American):
Invesco S&P 500 Equal Weight ~+29% / iShares S&P 500 Equal Weight ~+32%
VanEck Morningstar Wide Moat ~+27% / VanEck Morningstar Global Wide Moat ~+17%
Vanguard Small-Cap ~+67% / iShares MSCI World Small Cap ~+33%
Invesco S&P MidCap Quality ~+19% / iShares Edge MSCI World Multifactor ~+52%
WisdomTree EM Multifactor ~+51% / iShares Core MSCI EM ~+52%
Tema Monopolies and Oligopolies ETF ~+24% / (no non-American comparison)
iShares MSCI USA Min Vol Factor ~+3% / iShares Edge MSCI World Minimum Volatility UCITS ~+9%]

Over time, I expect both portfolios to generate similar returns.

New transaction

Tomorrow at the market opening, we will add to our ETF Portfolio.

We are increasing our exposure to small caps.

For Americans:

Buy Vanguard Small-Cap ETF ($VB) for $500

Current stock price: $296.5

For Non-Americans:

iShares MSCI World Small Cap UCITS ETF ($IUSN) for EUR500

Current stock price: EUR9.1

Everything In Life Compounds
Team Compounding Quality

Book: Order your copy of The Art of Quality Investing here

Used sources
Interactive Brokers: Portfolio data and executing all transactions
Fiscal.ai: Financial data