Invest in the Materials – Broad Segment with Vanguard’s VAW ETF

The Materials – Broad segment of the equity market offers a diverse range of companies across various sub-sectors, including basic materials, precious metals, and industrial metals. With a vast array of investment options available, selecting the right fund can be a daunting task for investors.

Understanding Vanguard’s VAW ETF

Vanguard’s Materials ETF (VAW) is an excellent choice for broad exposure to the Materials – Broad segment. Launched on January 26, 2004, this passively managed exchange-traded fund has garnered significant attention from retail and institutional investors alike. The fund offers a unique combination of low costs, transparency, flexibility, and tax efficiency.

Why Choose VAW?

One of the primary reasons investors prefer passively managed ETFs like VAW is their ability to provide broad exposure to a particular sector or segment. This type of investment vehicle allows for diversification across various companies within a specific industry, thereby minimizing single-stock risk. Additionally, passively managed funds are often designed to track a particular index, ensuring that the investor’s portfolio remains aligned with the performance of the underlying market.

Index Details

The Vanguard Materials ETF (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, providing a comprehensive representation of the industry.

Costs

When selecting an ETF, costs play a crucial role in determining its overall performance. Annual operating expenses for VAW are a mere 0.09%, making it one of the least expensive products in the space. Additionally, the fund boasts a 12-month trailing dividend yield of 1.72%, offering investors a steady stream of income.

Sector Exposure and Top Holdings

VAW’s holdings provide an excellent representation of the Materials sector, with approximately 100% allocation to this segment. The top ten holdings account for about 47.29% of total assets under management, ensuring that the fund remains diversified across various companies within the industry.

Top Ten Holdings

Linde Plc (LIN): 17.05%
Sherwin-Williams Co/the (SHW): 10.23%
CRH PLC (CRH): 8.52%
DuPont de Nemours Inc/ (DD): 6.42%
E I du Pont de Nemours and Company (DWDP): 5.69%
3M Co/the (MMM): 5.45%
Emerson Electric Co/the (EMR): 4.87%
Ingersoll-rand Plc (IR): 4.55%
Illinois Tool Works Inc (ITW): 4.24%
Ppg Industries Inc (PPG): 3.93%

Why These Holdings?

The top holdings in VAW are carefully selected to provide a well-rounded representation of the Materials sector. Companies like Linde Plc and Sherwin-Williams Co/the dominate the list, offering investors exposure to key industry players. The fund’s diversified approach ensures that no single holding significantly impacts its overall performance.

Performance and Risk

Since its inception on January 26, 2004, VAW has demonstrated an impressive track record. Over the past year (as of June 4, 2025), the ETF returned approximately -1.69%, while over the past three years it has delivered an average annual return of 9.14%. Despite a beta of 1.05 and standard deviation of 19.88% for the trailing three-year period, VAW remains a medium-risk choice in the space.

Performance Metrics

| Year | Average Annual Return |
| — | — |
| 2022 | -12.13% |
| 2023 | 20.44% |
| 2024 | 15.25% |

Alternatives

For investors seeking alternative exposure to the Materials sector, several options are available. FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR) and Materials Select Sector SPDR ETF (XLB) are two notable choices that track different indexes within the industry.

Comparison with Alternatives

Conclusion

The Vanguard Materials ETF (VAW) offers a compelling choice for investors looking to gain broad exposure to the Materials – Broad segment. With its low costs, transparent approach, and diversified holdings, VAW provides an attractive option for long-term investors seeking to ride the waves of the materials industry.

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.

Unlock Broad Market Exposure with Vanguard’s Low-Cost VAW ETF