Summary

• The Moat Index outperformed through February before a sharp March–May selloff erased its lead.
• Nike, Zoetis, Clorox, Estée Lauder, and GE HealthCare drove most of the underperformance.
• Despite recent weakness, all five companies retain Morningstar's wide economic moat ratings.
• Following prior periods of underperformance, the Moat Index historically rebounded within 1-2 years.
• The Moat Index now trades at a 22% discount to fair value vs. S&P 500 indexes.

The Morningstar Wide Moat Focus Index has underperformed sharply since March. We review the stocks and drivers behind the gap and why history and current valuations may favor patience.

Index performance is not illustrative of

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