Michael Holt on investment strategy
From Michael Holt, Morningstar, Inc. and Pat Finn, Van Eck Global · · VettaFi
“The constituents are selected each quarter; it's equal weighted and 20 of the cheapest wide moat stocks are selected. These companies have a durable competitive edge, meaning they are high-quality businesses with sustainable profits expected 10 to 20 years from now, not just flash-in-the-pan companies.”
On , Michael Holt, Chief Financial Officer at MORNINGSTAR INC, spoke about investment strategy during Michael Holt, Morningstar, Inc. and Pat Finn, Van Eck Global on VettaFi.
About Michael Holt
Michael Holt, chief strategy officer and president of research, investments and analytics at Morningstar, advised new graduates to pursue a career in finance by staying curious about how markets work, how funds are structured, and how companies are valued. He cautioned against assuming that someone will "bail you out" of an investment and encouraged graduates to dig into valuation approaches and learn from them. In a 2015 interview, Holt discussed the wide moat index, which selects 20 of the cheapest wide moat stocks each quarter. He explained that the index focuses on companies with durable competitive advantages expected to sustain profits for 10 to 20 years, and that stocks are chosen based on the intersection of high-quality businesses and attractive valuations. Holt noted that Facebook was considered a wide moat business but was only added to the index when its valuation became attractive. He described the ETF structure as tax-efficient despite high turnover, and said that some of Morningstar's best analysts participate in the quarterly selection process.