The Vanguard Materials ETF (VAW) was launched on 01/26/2004, and is a passively managed exchange traded fund designed to offer broad exposure to the Materials - Broad segment of the equity market.

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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 $3.05 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 0.10%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.57%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that 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 15.46% of total assets, followed by Sherwin-Williams Co/the (SHW) and Freeport-Mcmoran Inc (FCX).

The top 10 holdings account for about 38.57% of total assets under management.

Performance and Risk

Year-to-date, the Vanguard Materials ETF return is roughly 9.65% so far, and it's up approximately 19.05% over the last 12 months (as of 09/23/2024). VAW has traded between $162.50 and $208.32 in this past 52-week period.

The ETF has a beta of 1.10 and standard deviation of 19.87% for the trailing three-year period, making it a medium risk choice in the space. With about 121 holdings, it effectively diversifies company-specific risk.