SAN FRANCISCO (MarketWatch) — Raise the drawbridge and man the parapets. Some investors are looking to defend their portfolios with help from mutual funds and exchange-traded funds that buy stocks of companies with “wide moats” — meaning barriers to entry that their competitors find extremely difficult to overcome.
“Moat” is Warren Buffett’s description of such an advantage. The famed investor has said that he seeks “economic castles protected by unbreachable ‘moats.’” The idea is to buy, when they are reasonably priced, shares of companies that dominate their industries and show clear potential to maintain their superiority over decades. Read more: Warren Buffett’s winning ways, 50 years on.