VAW ETF Explained: Returns, Expense Ratio, Holdings, and Alternative ETFs at a Glance
A passive ETF that tracks the entire US materials sector at a low cost. It carries a high chemicals weighting and holds a broad range of large-, mid-, and small-cap stocks.
SubscribeWhat Is This ETF?
The fund tracks the MSCI US Materials index, holding large-, mid-, and small-cap US materials companies on a market-cap-weighted basis. It covers the materials industry as a whole in a single holding, including chemicals, metals and mining, construction materials, and packaging.
It suits long-term investors who want diversified, passive exposure to the US materials sector.
Vanguard launched the fund in 2004, and it is managed passively by tracking an index.
How Does It Invest?
| Item | Details |
|---|---|
| Tracked index | MSCI US Materials index |
| Management style | Passive (index tracking) |
| Rebalancing frequency | Quarterly |
| Dividend frequency | Quarterly |
| Expense ratio | 0.09% |
The fund holds the constituents of the MSCI US Materials index in proportion to their market capitalization and tracks the performance of the US materials sector as a whole. Chemicals carry the largest weight, followed by metals and mining, construction materials, and packaging. It includes not only large caps but also small and mid-sized materials companies, so it covers the whole sector broadly.
- Wide market-cap coverage, from large caps to small caps
- Low-cost management by Vanguard
Size and Costs
Assets under management (AUM) stand at $3.0B, and the expense ratio is 0.09% per year.
Compared with its peer ETF XLB, it holds more stocks and therefore includes small-cap exposure, and its fees are low relative to the category average.
Performance and Trends
1-Year Price Performance
Dividend & Yield
52-Week Price RangeThe materials sector is highly sensitive to the global economic cycle and commodity prices. During inflationary periods, commodity and mining stocks tend to be relatively strong, while the chemicals and construction materials weightings can become a burden when economic slowdown fears rise.
Structural factors such as expanded infrastructure investment and rising demand for minerals tied to the energy transition are behind the capital inflows into the materials sector. On the other hand, interest rate levels and the strength of the US dollar are the main variables affecting short-term fund flows.
Strengths and Weaknesses
Low fees and broad sector coverage are its strengths, while the high volatility typical of a cyclical sector is the main risk.
💪 Key Strengths
⚠️ Points to Watch
Alternative ETFs and Related Products
XLB, shown in the table, is a large-cap-focused ETF that holds only S&P 500 materials companies, and it has fewer holdings than VAW. XME is an equal-weighted ETF focused on metals and mining, which can be considered when you want greater mining exposure. IYM is a US materials ETF managed by iShares with a similar composition. FMAT is Fidelity's low-cost materials ETF, and FXZ is an actively managed materials ETF that seeks alpha. As a direct substitute, IYM tracks the same materials sector through a different index, and XME can be reviewed separately if you want a higher mining and raw materials weighting.
Peer Comparison ETFs| Ticker | Name | Price | Change | AUM | Total Expense Ratio | Dividend Yield | 1Y |
|---|---|---|---|---|---|---|---|
 XLB | State Street Materials Select Sector SPDR ETF | $52.74 | +0.4% | $8.3B | 0.08% | 1.64% | +22.4% |
 XME | State Street SPDR S&P Metals & Mining ETF | $97.82 | -3.2% | $3.8B | 0.35% | 0.35% | +1.4% |
 IYM | iShares U.S. Basic Materials ETF | $179.52 | -1.3% | $1.3B | 0.37% | 1.28% | +25.1% |
 FMAT | Fidelity MSCI Materials Index ETF | $58.48 | -0.2% | $603.6M | 0.08% | 1.4% | +16.3% |
 FXZ | First Trust Materials AlphaDEX Fund | $74.48 | -2.1% | $365.5M | 0.64% | 1.38% | +24.0% |
Top Holdings| Ticker | Name | Weight | Price | Change | Market Cap | P/E | Dividend Yield |
|---|---|---|---|---|---|---|---|
| LIN | Linde Plc | 0.29% | $514.24 | +2.2% | $237.1B | 34.2 | 1.25% |
| NEM | Newmont Corp | 0.16% | $106.61 | -4.6% | $110.8B | 12.4 | 0.97% |
| FCX | Freeport-McMoRan Inc | 0.12% | $62.47 | -5.5% | $89.7B | 26.3 | 0.95% |
| SHW | Sherwin-Williams Co | 0.05% | $332.61 | +0.8% | $80.4B | 30.6 | 0.9% |
| CRH | CRH Plc | 0.10% | $90.81 | +0.2% | $60.4B | 17.1 | 1.71% |
| ECL | Ecolab Inc | 0.05% | $302.98 | +0.7% | $84.9B | 41.2 | 0.97% |
Investor Checkpoints
Here are the points to review before investing in VAW. Given the nature of the materials sector, it is necessary to understand its sensitivity to the economic cycle and commodity prices in advance and to confirm that it fits your investment objectives.
| Checkpoint | What to check | Current status |
|---|---|---|
| 💵 Expense ratio | Check the cumulative effect of the expense ratio over a long holding period | Remains low |
| 📊 Sector concentration | As a single-sector materials ETF, check its volatility relative to the broad market | Single-sector exposure |
| 🏭 Chemicals weighting | Check the chemicals industry weighting and the distribution across sub-sectors | High chemicals weighting |
| 💱 Exchange rate | Check the effect of dollar exchange rate changes on investors who convert from Korean won | No currency hedge applied |
During a recession, demand for materials can shrink and the sector as a whole may weaken. Because the cycles of sub-industries such as chemicals and mining differ, short-term volatility can widen, and exchange rate movements also affect returns.
It is a suitable choice for long-term investors who want to diversify across the US materials sector at a low cost. It is generally used as a partial allocation within a portfolio, after understanding the characteristics of a cyclical sector.
SubscribeDisclaimer: This content is for informational purposes only and does not constitute investment advice. All investment responsibility lies with the investor.
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