16 ETFs packed with ‘moat’ companies that can keep their competitive advantage

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We are looking for peer-beating exchange-traded funds that hold companies with wide moats

The screen

From the perspective of an equity investor, Wednesday’s Bank of Canada rate hike means the cost of debt for companies increases, which puts pressure on management to generate enough earnings to service both debt obligations and continue to provide returns to shareholders. A common measure used to compare a company’s bottom line against both its debt and equity obligations is return on capital.

occurs when the value of a good or service increases for both new and existing users as more people use that good or service.are things such as patents, government licences, and brand identity that keep competitors at bay.– a company can produce goods or services at a lower cost, allowing them to undercut their competitors or achieve higher profitability.benefits companies operating in a market that only supports one or a few competitors, limiting rivalry.

Companies with wide moats are predicted by Morningstar to maintain competitive advantages for more than 20 years, while those with narrow moats are predicted to maintain advantages for 10 years. For investors who also believe holding wide-moat stocks will help companies endure interest rate hikes, this week I use Morningstar Direct to screen for Canadian-listed ETFs that hold a high weighting in narrow or wide moat stocks. Moreover, I used Morningstar’s star rating to find funds that have beaten their category peers on an after-fee, risk-adjusted basis.

 

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