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How the Wide Moat Focus Index Performed

The quarter saw the strategy underperform the benchmark by 1.6 percentage points, pausing strong momentum over the past two years.

Andrew Lane: Within the Morningstar equity research department, we keep a close eye on the performance of the Wide Moat Focus Index, a collection of the cheapest U.S. wide-moat-rated stocks under our coverage. Typically, the strategy holds 40 to 50 stocks, with the reconstitution and rebalancing process taking place four times per year. The index is important to us as its construction represents the cross section of our differentiated economic moat methodology and our rigorous bottom-up valuation work.

In the first quarter of 2018, the strategy underperformed its Morningstar U.S. market benchmark by 1.6 percentage points. This represents a pause from the strong momentum established over the last two years. In 2017, the Wide Moat Focus Index outperformed its benchmark by 2.3 percentage points and in 2016 the strategy outperformed its benchmark by 10 percentage points.

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