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?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $349.63 million, this makes it one of the average sized ETFs in the Style Box - All Cap Blend. SMOT is managed by Van Eck. This particular fund seeks to match the performance of the MORNINGSTAR US SML-MID CAP MOAT FOCUS ID before fees and expenses.
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.
Operating expenses on an annual basis are 0.49% for SMOT, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.34%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 21.8% of the portfolio, the fund has heaviest allocation to the Industrials sector; Healthcare and Consumer Discretionary round out the top three.
When you look at individual holdings, Albemarle Corp (ALB) accounts for about 2.3% of the fund's total assets, followed by Huntington Ingalls Industries Inc (HII) and Schlumberger Nv (SLB).
The top 10 holdings account for about 17.12% of total assets under management.
Performance and Risk
The ETF return is roughly 2.46% and is up about 6.03% so far this year and in the past one year (as of 03/03/2026), respectively. SMOT has traded between $28.40 and $37.73 during this last 52-week period.
SMOT has a beta of 1.23 and standard deviation of 17.66% for the trailing three-year period. With about 108 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 ETF (VTI) tracks CRSP US Total Market Index. iShares Core S&P Total U.S. Stock Market ETF has $82.55 billion in assets, Vanguard Total Stock Market ETF has $582.67 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
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VanEck Morningstar SMID Moat ETF (SMOT): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).