Long before Warren Buffett popularized the term “economic moat” in his 1986 “Berkshire Hathaway Letter to Shareholders”, savvy investors have zealously sought out businesses with sustainable competitive advantages. On April 15, 2024, S&P Dow Jones Indices (S&P DJI) took a pioneering step by introducing a purely systematic approach to identify and track companies possessing this trait.

Since its launch, the S&P 500^® Economic Moat Index has made a strong debut, outperforming the S&P 500 during its live period and YTD in 2025. Additionally, it has provided downside protection compared to the benchmark. To mark the index’s one-year anniversary, this blog will examine its short- and long-term performance, assess its defensive characteristics during historical drawdowns and highlight its current profitability. For those interested in delving deeper into the index’s methodology, index characteristics and performance, our team published a paper following the index launch last year.

Performance Comparison

Exhibit 1 shows that the S&P 500 Economic Moat Index outperformed the S&P 500 over the one-year period since its launch (April 15, 2024, to April 15, 2025) and YTD in 2025. Furthermore, it outperformed The 500™ during the two most significant drawdowns in the live period: the tech sell-off in the summer of 2024 and the tariff-related decline in early 2025.

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Exhibit 2 highlights the notable outperformance of the S&P 500 Economic Moat Index in both absolute and risk-adjusted returns over the long term when compared to The 500. Not only did the index surpass the S&P 500 in absolute terms across all time periods, but it also exhibited lower volatility and a downside capture of 88.55.

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Defensive Characteristics

Exhibit 3 shows the historical downside protection offered by the S&P 500 Economic Moat Index during past market selloffs. Over the six major drawdowns shown, the S&P 500 Economic Moat Index recorded an average drawdown of 11.4% versus 13.1% for The 500.

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Enhanced Profitability

Exhibit 4 showcases the improved profitability metrics such as return on assets (ROA), return on equity (ROE) and return on invested capital (ROIC) of the S&P 500 Economic Moat Index versus the S&P 500 Equal Weight Index. The improved profitability metrics make sense given that one of the key benefits of wide-moat companies is their ability to generate and sustain high returns on capital.

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Conclusion

The S&P 500 Economic Moat Index represents the first fully systematic strategy specifically designed to identify companies with sustainable competitive advantages. Since its launch just over a year ago, the index has made a strong start, outperforming its benchmark while exhibiting defensive characteristics and delivering superior profitability. When examining indices that show resilience and consistent growth, the S&P 500 Economic Moat Index stands out as a compelling strategy that prioritizes durability and market leadership.

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