Why is VanEck shutting down the ESG Moat and Wide Moat Growth ETFs despite market momentum?
VanEck, a well-known asset manager with over $135.8 billion in assets under management as of July 2025, has confirmed it will shutter two exchange-traded funds (ETFs) under the Morningstar Moat strategy family. The decision, disclosed on September 4, 2025, impacts the VanEck Morningstar ESG Moat ETF (Ticker: MOTE) and the VanEck Morningstar Wide Moat Growth ETF (Ticker: MGRO). Both ETFs are listed on the Cboe BZX Exchange.
The liquidation is scheduled for completion by September 26, 2025, with shares delisting after the market close on September 19, 2025. Shareholders holding units as of the liquidation date will receive a cash payout equal to the net asset value (NAV) of their holdings.
VanEck cited an internal review of assets under management (AUM), liquidity, performance, and investor interest as the basis for the closure. While the firm did not disclose exact AUM figures for MOTE and MGRO, industry trackers have observed below-threshold activity levels, suggesting that the ETFs may have struggled to build scale compared to VanEck’s flagship thematic products.
The decision reflects VanEck’s strategy to streamline its ETF portfolio and concentrate on funds demonstrating stronger investor traction or more compelling risk–return profiles in the current market.
What does the liquidation process look like for ETF shareholders ahead of the September 26 deadline?
Investors can continue trading MOTE and MGRO on the exchange until market close on September 19, 2025, but should be aware that their brokerage may impose transaction fees. VanEck has also confirmed it will cease accepting creation orders from Authorized Participants on the same date.
After the trading window closes, both ETFs will be formally de-listed, and shareholders who still hold units will receive a liquidating cash distribution to their brokerage accounts. This final payout, scheduled around September 26, 2025, will reflect the NAV of the shares on the liquidation date.
In addition to the NAV-based payout, shareholders may receive final distributions of net income and capital gains earned by the funds that had not been previously distributed. The complete tax treatment of both the income and capital distributions—including any amount treated as a return of capital—will be detailed in the year-end tax statements provided to investors.
VanEck advised investors to consult with financial advisors to understand the capital gain or loss implications, as the liquidation could trigger taxable events based on individual cost basis.
How do MOTE and MGRO fit into VanEck’s broader ETF strategy and why were they vulnerable?
The two ETFs were part of VanEck’s collaboration with Morningstar, a series built around the concept of economic moats—a term popularized by Warren Buffett referring to companies with sustainable competitive advantages.
MOTE, the ESG version, targeted mid-cap stocks screened for environmental, social, and governance (ESG) compliance while still aligning with Morningstar’s moat methodology. However, ESG investing has faced mixed flows and sentiment in 2024–2025, with U.S. inflows tapering off in the face of political polarization and regulatory uncertainty.
MGRO, on the other hand, emphasized “wide moat” growth stocks, leaning heavily into sectors like technology, healthcare, and consumer staples. Yet, the fund’s growth bias may have limited its appeal during 2025’s more value-oriented or dividend-focused market cycles, especially amid higher interest rates and investor caution.
Institutional sentiment indicates that while moat investing remains popular, the niche overlaps—such as ESG + moat or growth + moat—can fragment demand, making it difficult for such funds to scale meaningfully unless paired with strong thematic momentum or large institutional mandates.
What has VanEck signaled about its future ETF roadmap amid this streamlining?
While the closure of MOTE and MGRO reflects a tightening of VanEck’s ETF roster, the asset manager remains active in expanding other parts of its portfolio, particularly those aligned with emerging technologies, commodity strategies, and international equities.
With its legacy in pioneering access to gold (since 1968) and emerging markets (since 1993), VanEck is expected to maintain focus on core exposures and data-driven active management in segments where differentiation is clearer. Its passive index-tracking products are also likely to receive more internal support if they offer scalable AUM potential and lower operational friction.
Notably, as thematic investing matures, ETFs that cannot cross a critical mass threshold—often pegged between $50 million and $100 million in AUM—face rising pressure from cost-sensitive investors and issuers alike. MOTE and MGRO, despite Morningstar branding, likely fell short on this metric.
As of July 2025, VanEck continues to manage more than $135.8 billion across mutual funds, institutional accounts, and ETFs, suggesting that its broader strategy remains robust even as it pares back underperforming or less liquid offerings.
How are investors and the broader market likely to interpret these ETF closures?
From an investor sentiment perspective, the move is being interpreted as pragmatic rather than alarming. Analysts note that fund closures are a routine part of ETF lifecycle management, particularly in a crowded market where new issuances compete for attention and capital.
While some individual investors may find closures inconvenient—especially those using MOTE or MGRO for targeted exposure—the broader takeaway is that VanEck is refining its product mix to improve efficiency and focus.
More importantly, the move reflects a larger industry trend in 2025: ETF consolidation is picking up pace as issuers reevaluate small-scale products that carry high operating costs and thin trading volumes.
VanEck’s transparency in providing closure timelines and tax clarity has been seen as a positive by industry observers, reducing the risk of investor confusion.
What does this mean for ETF innovation and thematic investing in 2025?
ETF innovation remains strong, but the bar for sustainable product success is rising. The fate of MOTE and MGRO illustrates that even strategies backed by well-known frameworks—like Morningstar’s moat methodology—can fall short if they fail to attract sustained flows, institutional mandates, or differentiated performance.
In 2025, investors are gravitating toward ETFs that offer clear performance narratives, geopolitical hedging, or sector rotation agility, particularly in a macroeconomic environment shaped by inflation concerns, monetary tightening, and shifting ESG sentiment.
VanEck’s decision to liquidate these two funds underscores the importance of strategic focus in the ETF business. It is not a signal of distress, but rather a portfolio optimization move aimed at preserving brand credibility and capital efficiency.
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