Designed to provide broad exposure to the Style Box - All Cap Blend category of the market, the VanEck Morningstar SMID Moat ETF (SMOT) is a smart beta exchange traded fund launched on 10/04/2022.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Managed by Van Eck, SMOT has amassed assets over $333.29 million, making it one of the average sized ETFs in the Style Box - All Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the MORNINGSTAR US SML-MID CAP MOAT FOCUS ID.
The Morningstar US Small-Mid Cap Moat Focus Index tracks the overall performance of small and mid-cap companies with sustainable competitive advantages and attractive valuations.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for SMOT are 0.49%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.26%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 18.5% of the portfolio, the fund has heaviest allocation to the Healthcare sector; Information Technology and Industrials round out the top three.
Looking at individual holdings, Marvell Technology Inc (MRVL) accounts for about 3.52% of total assets, followed by Datadog Inc (DDOG) and Akamai Technologies Inc (AKAM).
The top 10 holdings account for about 18.07% of total assets under management.
Performance and Risk
Year-to-date, the VanEck Morningstar SMID Moat ETF return is roughly 9.36% so far, and is up about 13.87% over the last 12 months (as of 07/17/2026). SMOT has traded between $34.37 $39.59 in this past 52-week period.
The ETF has a beta of 1.08 and standard deviation of 17.09% for the trailing three-year period. With about 116 holdings, it effectively diversifies company-specific risk .
Alternatives
VanEck Morningstar SMID Moat ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
iShares Core S&P Total U.S. Stock Market ETF (ITOT) tracks S&P Total Market Index and the Vanguard Total Stock Market Index Fund ETF Shares (VTI) tracks CRSP US Total Market Index. iShares Core S&P Total U.S. Stock Market ETF has $94.37 billion in assets, Vanguard Total Stock Market Index Fund ETF Shares has $662.24 billion. ITOT has an expense ratio of 0.03% and VTI changes 0.03%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Blend
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.Boost Your Portfolio with Our Top ETF Insights
Zacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.
Don’t miss out on this valuable resource. It’s free!
Get it now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
VanEck Morningstar SMID Moat ETF (SMOT): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).