This ETF Has Pulled Off A Real Magic Trick

There have been three sectors that have outperformed the S&P 500 over the past three months and they are: technology (XLK), consumer discretionary (XLY), and communication services (XLC).

These three sectors represent 26.01%, 10.09%, and 8.11%, respectively, of the S&P 500. That TOTALS 44.21% of the S&P 500. One of the best-performing ETFs has been the VanEck Vectors Morningstar Wide Moat ETF (MOAT):

Enter VanEck Vectors Morningstar Wide Moat ETF (MOAT):

The amazing part is that MOAT owns 40.08% of these three outperforming sectors, more than 4 percentage points less than their representation in the S&P 500. To me, this means only one thing. The manager(s) of this fund do a great job of individual stock selection. But making this even more amazing is that no stock in this ETF makes us more than 2.75% of the ETF. Its Top 10 holdings are only 26% of the entire ETF. So it's a well-diversified ETF that underweights technology primarily and yet it still manages to outperform. That's why we included it in our prior Model ETF Portfolio in the upcoming quarter and why we owned it in our last Model ETF Portfolio.

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.