A Disciplined Approach to Tech: Seeking Value in Competitive Moats

This ETF targets tech firms with strong competitive advantages trading at a discount. It focuses on US, Dutch, and German leaders, rebalancing quarterly to maintain quality and value discipline.

As the technology sector navigates March 2026 in search of fresh growth catalysts, one investment strategy emphasizes a fundamental principle: identifying firms with durable competitive advantages. The ETFS Morningstar Global Technology ETF employs a targeted methodology, selecting companies that not only lead in innovation but are also considered attractively priced by the market. This represents a distinct departure from conventional market-cap-weighted index strategies.

Regional Allocation and Portfolio Mechanics

The United States represents the clear geographic focus, accounting for approximately 62 to 63 percent of the fund's holdings. Significant additional allocations are directed toward the Netherlands and Germany. Shifts in these weightings during the fund's rebalancing process frequently signal where analysts currently perceive the most substantial market opportunities and strongest technological leadership.

The portfolio is dominated by the information technology sector, which constitutes 75 to 80 percent of holdings. This core exposure is supplemented by smaller positions in the financial and industrial sectors. The fund's quarterly rebalancing occurs in mid-March, a systematic process designed to ensure the portfolio's holdings remain current and continue to meet the stringent criteria for competitive strength and valuation. Because the underlying index adjusts two sub-portfolios alternately each quarter, the current composition reflects the latest market assessments.

The "Moat" Philosophy: Quality and Price Discipline

At the heart of the fund's strategy is the "economic moat" philosophy. Morningstar actively seeks companies possessing long-term competitive advantages that protect them from rivals. This search extends beyond mere technological dominance in fields like cloud infrastructure or Software-as-a-Service (SaaS). A critical, additional filter is valuation: only companies trading at a discount to their assessed fair value are selected for inclusion.

This dual focus on substance and price aims to help investors capture gains from structural trends such as Infrastructure-as-a-Service (IaaS) or advances in edge computing, while avoiding potentially overhyped and overvalued stocks. The resulting portfolio concentrates on firms that develop and support operating systems, applications, or essential IT consulting services.

With an annual management fee of 0.45 percent, this ETF presents a specialized alternative to broad market indices. Its combined emphasis on quality characteristics and price discipline seeks to systematically harness long-term competitive advantages within the dynamic technology sector.