"The Magnificent 7 AI tech stocks have served as the rocket fuel propelling the S&P 500 on its bull run over the past few years. However, there is a risk in overweighting on high-flying stocks that have all made their gains based on developments in the same sector. The Magnificent 7's gains make up more than half of the average 16% YTD returns on the S&P 500. Without them, those S&P YTD gains drop to an impressive but decidedly more earth-bound 7%."
"Morningstar is highly regarded for its research into the financial markets and its various investment funds, structures, and platforms. One unique rating category that Morningstar has devised for stocks is its "Economic Moat". The calculation is designed to identify and quantify a company's competitive advantages and its ability to generate substantial returns over an extended period. The VanEck Morningstar Wide Moat ETF (CBOE: MOAT) gives investors an opportunity to directly invest in an ETF that tracks the Morningstar Wide Moat Focus Index."
The Magnificent 7 AI tech stocks have been the primary drivers of the S&P 500's recent bull market, accounting for more than half of the index's average 16% year-to-date return. Excluding those names, the S&P's YTD gain falls to 7%, exposing concentration risk and the need for diversification. Morningstar's Economic Moat rating identifies companies with durable competitive advantages and sustainable returns. The VanEck Morningstar Wide Moat ETF (MOAT) tracks companies with Morningstar-rated wide moats, offering a diversified way to access firms with intangible assets, cost advantages, and other durable competitive edges.
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