From Morningstar:

High-quality, undervalued wide-moat stocks have outperformed the broad US Market Index for three, five, and 10-year periods. This trend makes the index a top choice for long-term investors looking for high-quality stocks at cheap prices.

Etsy was trading 44% below fair value estimate and Campbell Soup 28% below, making both attractive long-term investments. The index is regularly reconstituted with two sub-portfolios of 40 stocks.

Many of the newly added 40 stocks belong to healthcare, consumer defensive, and industrial sectors, with the former two sectors currently undervalued. Morningstar removes stocks from the index that have dropped below a certain market capitalization or have seen price/fair value ratios rise significantly.

A company with a wide economic moat has advantages, such as high switching costs, a strong brand identity, or economies of scale, that allow it to fend off competitors for years. Morningstar sees a successful stock-investing strategy by purchasing discounted wide-moat stocks.



Read more: 10 Undervalued Wide Moat Stocks