Relatively speaking, 2018 was a good year for the Morningstar Wide Moat Focus Index. The index lost just 0.74% last year. In comparison, the broader Morningstar US Market Index shed more than 5%; the S&P 500 dipped 4.38%.
In an effort to keep the index focused on the least expensive high-quality stocks, we reconstitute the index regularly. The index consists of two subportfolios containing 40 stocks each, many of which are overlapping positions. The subportfolios are reconstituted semiannually in alternating quarters, on a "staggered" schedule. We re-evaluate the index's holdings and add and remove stocks based on a preset methodology. Because stocks are equally weighted within each subportfolio, the reconstitution process also involves right-sizing positions.
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Susan Dziubinski does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.