Should You Invest in the Vanguard Materials Index Fund ETF Shares (VAW)?

Launched on January 26, 2004, the Vanguard Materials Index Fund ETF Shares (VAW) is a passively managed exchange traded fund designed to provide a broad exposure to the Materials - Broad segment of the equity market.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 15, placing it in bottom 6%.

Index Details

The fund is sponsored by Vanguard. It has amassed assets over $3.06 billion, making it one of the larger 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

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

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 1.35%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Materials sector -- about 98.7% of the portfolio.

The top 10 holdings account for about 46.61% of total assets under management.

Performance and Risk

The ETF has added roughly 13.72% and was up about 16.64% so far this year and in the past one year (as of 08/18/2026), respectively. VAW has traded between $190.36 and $244.13 during this last 52-week period.

The ETF has a beta of 0.97 and standard deviation of 17.76% 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 Index Fund ETF Shares holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VAW is an outstanding option for investors seeking exposure to the Materials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR) tracks Morningstar Global Upstream Natural Resources Index and the State Street Materials Select Sector SPDR ETF (XLB) tracks Materials Select Sector Index. FlexShares Morningstar Global Upstream Natural Resources ETF has $7.02 billion in assets, State Street Materials Select Sector SPDR ETF has $8.66 billion. GUNR has an expense ratio of 0.46%, and XLB charges 0.08%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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This article originally published on Zacks Investment Research (zacks.com).

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