XLB vs VAW: Materials Sector ETFs — Ultra-Cheap Commodity and Chemical Exposure
XLB holds 28 S&P 500 materials companies. VAW holds 115+ materials companies including mid-cap miners, specialty chemicals, and packaging companies. Both cost under 0.10%.
XLB (Materials Select Sector SPDR) and VAW (Vanguard Materials ETF) both target the US materials sector — chemicals, mining, metals, packaging, and construction materials. XLB holds 28 S&P 500 materials companies — Linde, Sherwin-Williams, Freeport-McMoRan, Air Products, and Nucor are typical top holdings. VAW holds 115+ materials companies adding mid-cap specialty chemical companies, smaller miners, and packaging companies not in the S&P 500. Both charge essentially nothing: XLB 0.09%, VAW 0.10%. Materials are a highly cyclical sector closely tied to commodity prices, construction activity, and global economic growth. XLB is the more liquid vehicle with higher trading volume; VAW's broader index provides better diversification within the sector.
Whether the lower-cost fund suits your situation depends on your existing holdings, account type, tax situation, and how you use each fund. This is a cost comparison, not a personalized recommendation.
Both funds trade commission-free at every major brokerage. Where to buy them →
📋 XLB vs VAW: Key Facts Side by Side
| Metric | XLB | VAW |
|---|---|---|
| Fund Name | State Street Materials Select Sector SPDR ETF | Vanguard Materials Index Fund ETF Shares |
| Issuer | State Street | Vanguard |
| Tracks Index | Materials Select Sector Index | MSCI US IMI Materials 25/50 |
| Expense Ratio | 0.09% ✓ | 0.10% |
| Cost per $10K/yr | $9.00 | $10.00 |
| AUM | $7.8B | $4.5B |
| Holdings | 28 | 115 |
| Inception | 1998 | 2004 |
| 1-Year Return | +10.96% | +8.13% |
| 3-Year Return | +10.34% | +10.98% |
| 5-Year Return | +6.07% | +6.26% |
| Dividend Yield | 1.77% | 1.46% |
| Holdings Overlap | See holdings overlap → | |
| Avg Bid-Ask Spread | 0.01% | 0.02% |
AUM and returns updated Oct 14, 2026 from ETF BFF database; expense ratios verified against issuer filings. Returns are annualised. Not investment advice.
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📊 XLB vs VAW: Annualised Returns
Annualised returns (trailing, price-based). Past performance does not guarantee future results.
🎯 Which Fund Fits Which Investor?
- want the lowest fees: saves ~$1/yr per $10K vs VAW
- already use State Street and prefer staying within one fund family
- want broader diversification (115 holdings vs 28)
- already use Vanguard and prefer staying within one fund family
💰 What the Fee Difference Actually Costs
Adjust the numbers for your situation. This models each fund's expense ratio compounding against your balance over time.
Assumes a constant annual return reinvested, with each fund's expense ratio deducted yearly. Illustrative only; actual returns vary. Past performance does not guarantee future results.
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