Should You Invest in the Vanguard Materials ETF (VAW)?
Looking for broad exposure to the Materials - Broad segment of the equity market? You should consider the Vanguard Materials ETF (VAW), a passively managed exchange traded fund launched on 01/26/2004.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
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Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 8, placing it in top 50%.
Index Details
The fund is sponsored by Vanguard. It has amassed assets over $2.53 billion, making it one of the largest ETFs attempting to match the performance of the Materials - Broad segment of the equity market. VAW seeks to match the performance of the MSCI US Investable Market Materials 25/50 Index before fees and expenses.
The MSCI US Investable Market Materials 25/50 Index includes stocks of U.S. companies within the materials sector.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.09%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.72%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Materials sector--about 100% of the portfolio.
Looking at individual holdings, Linde Plc (LIN) accounts for about 17.05% of total assets, followed by Sherwin-Williams Co/the (SHW) and Crh Plc (CRH).
The top 10 holdings account for about 47.29% of total assets under management.
Performance and Risk
So far this year, VAW return is roughly 3.59%, and is down about -1.69% in the last one year (as of 06/04/2025). During this past 52-week period, the fund has traded between $163.82 and $215.21.
The ETF has a beta of 1.05 and standard deviation of 19.88% for the trailing three-year period, making it a medium risk choice in the space. With about 114 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Materials ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, VAW is a good option for those seeking exposure to the Materials ETFs area of the market. Investors might also want to consider some other ETF options in the space.