In short: ETF of the Month. "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." Mechanics: starts from the Morningstar US Small-Mid Cap Index, keeps only Wide or Narrow moat companies, then screens out bad momentum and picks "the best-priced companies (115 in total)." TER 0.49%, physical, ISIN US92189H7301. Sectors: IT 18.2%, Health Care 18.1%, Industrials 15.8%. Top holdings are a genuinely different set from the archive's usual universe — Carnival 1.51%, Acuity Brands 1.46%, Masco 1.46%, Gentex 1.45%, Block 1.42%, Bio-Techne, Royalty Pharma, Airbnb, Norwegian Cruise Line, Biogen. Not added to either model portfolio in this issue.
This fund tries to do two things at once that have historically each worked on their own. The first is to own companies with a durable competitive advantage — Morningstar rates these "wide moat" if it expects the advantage to last twenty years or more — which has beaten the American market by about four percentage points a year since 2008. The second is to own smaller companies, which have historically beaten the market by about three points a year, mainly because it is much easier to grow a small business than a very large one.
How it works in practice: start with all American small and medium-sized listed companies, keep only those Morningstar says have a moat, throw out the ones whose share prices are behaving badly, and from what is left buy the cheapest 115. The annual fee is 0.49%.
The reason for raising it now is a single relationship: smaller American companies currently trade at 0.87 times the earnings multiple of large ones, against a twenty-two-year average of 1.15 — as cheap, relative to big companies, as they have been in the whole period measured. And they are far less examined: eleven analysts follow the average one, against twenty-six for a member of the S&P 500.
One thing to notice before assuming this is a fund full of Hermès-like businesses: it accepts "narrow" moats as well as wide ones, and the cheapness filter pulls it toward cyclical companies. The largest holdings include two cruise lines.
Nothing matches this filter.
Verbatim excerpts from the public transcripts (auto-pulled at each mention's timestamp, lightly cleaned). Timestamps link into the video; "source page" opens that commentator's full analysis at this row. Click a mention's header line to expand it (one open at a time). For personal study — not investment advice.