The Vanguard Materials ETF (
VAW Quick Quote VAW - Free Report) 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.
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.
Additionally, sector ETFs offer convenient 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 2, placing it in top 13%.
The fund is sponsored by Vanguard. It has amassed assets over $3.98 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.
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain 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.
Looking at individual holdings, Linde Plc (
LIN Quick Quote LIN - Free Report) accounts for about 13.15% of total assets, followed by Sherwin-Williams Co. ( SHW Quick Quote SHW - Free Report) and Air Products And Chemicals Inc.
The top 10 holdings account for about 42.79% of total assets under management.
Performance and Risk
Year-to-date, the Vanguard Materials ETF has lost about -3.66% so far, and it's up approximately 4.19% over the last 12 months (as of 04/28/2022). VAW has traded between $173 and $199.49 in this past 52-week period.
The ETF has a beta of 1.13 and standard deviation of 26.93% for the trailing three-year period, making it a medium risk choice in the space. With about 117 holdings, it effectively diversifies company-specific risk.
Vanguard Materials ETF 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.
Materials Select Sector SPDR ETF (
XLB Quick Quote XLB - Free Report) tracks Materials Select Sector Index and the FlexShares Morningstar Global Upstream Natural Resources ETF ( GUNR Quick Quote GUNR - Free Report) tracks Morningstar Global Upstream Natural Resources Index. Materials Select Sector SPDR ETF has $7.79 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $8.06 billion. XLB has an expense ratio of 0.10% and GUNR charges 0.46%. Bottom Line
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