XLB vs VAW Stock Comparison: AI Score, Valuation, Performance and Upside
XLB and VAW both provide US materials sector exposure at similar low expense ratios. XLB holds only S&P 500 large-cap materials companies (~28 stocks) with high Linde concentration; VAW holds 115+ companies including small and mid-caps with broader diversification. For institutional traders needing liquidity, XLB is preferred. For buy-and-hold sector investors wanting full materials market coverage, VAW's broader diversification is more complete.
XLB vs VAW — XLB (the S&P 500 materials sector ETF with ~28 large-cap holdings concentrated in Linde, Air Products, and Sherwin-Williams at 0.09% expense ratio) versus VAW (the Vanguard materials ETF covering 115+ US materials companies including small and mid-caps for broader sector diversification at 0.10%).
XLB holds the edge across 5 of 5 key metrics in this comparison. XLB has delivered stronger 1-year price return (+12.03% vs +9.80% for VAW).
- want the most liquid materials ETF for tactical positioning — XLB's trading volume and bid-ask spreads are superior for short-term sector rotation
- value S&P 500 quality filter ensuring large-cap financial strength in materials holdings
- are comfortable with 20%+ Linde concentration and limited small/mid-cap materials exposure
- want the broadest US materials sector coverage including small and mid-cap companies in specialty chemicals, smaller miners, and packaging
- value Vanguard's index methodology for long-term buy-and-hold without concerns about short-term trading liquidity
- prefer slightly more diversification than XLB's concentrated large-cap portfolio for the same expense ratio
| Metric | XLB | VAW |
|---|---|---|
| ETF scorei | 57.0 | 54.0 |
| Latest closei | $49.99 | $223.49 |
| 1M returni | -4.82% | -5.03% |
| 6M returni | +7.28% | +6.50% |
| 1Y returni | +12.03% | +9.80% |
The ETF score weights long-term returns and risk-adjusted performance most heavily, but still rewards low expense ratios, larger fund size, and broader diversification — so it can favor low-cost, broad, mega-cap funds over smaller thematic or actively-managed funds even when the latter have delivered stronger returns.
How much would $10,000 be worth today if invested at the start of each period, with all dividends reinvested?
| Period | XLB | VAW |
|---|---|---|
| 1Y ago | $11.41K (+14.1%) started 2025-09-18 | $11.14K (+11.4%) started 2025-09-18 |
| 5Y ago | $15.35K (+53.5%) started 2021-09-20 | $15.34K (+53.4%) started 2021-09-20 |
| 10Y ago | $32.14K (+221.4%) started 2016-09-19 | $31K (+210.0%) started 2016-09-19 |
Hypothetical — past performance does not guarantee future results.
| Metric | XLB | VAW |
|---|---|---|
| Expense ratioi | 0.08% | 0.09% |
| Total assets (AUM)i | $8.75B | $4.54B |
| Dividend yieldi | 1.61% | 1.34% |
| Trailing P/Ei | 23.33 | 22.38 |
| Betai | 0.93 | 0.99 |
| 52-week change | 12.03% | 9.80% |
| Metric | XLB | VAW |
|---|---|---|
| 1Y returni | +12.03% | +9.80% |
| 6M returni | +7.28% | +6.50% |
| 1M returni | -4.82% | -5.03% |
| 1Y Sharpe ratio | 0.48 | 0.35 |
| Betai | 0.93 | 0.99 |
| Dividend yieldi | 1.61% | 1.34% |
| 5Y CAGR | +6.72% | +6.99% |
Over the past year, XLB and VAW have moved strongly in the same direction (correlation of 0.98), based on daily returns.
Lower drawdown and smaller single-period drops generally indicate a smoother ride, though they do not guarantee lower future risk.
| Period | Metric | XLB | VAW |
|---|---|---|---|
| 1Y | Growthi | +12.03% | +9.80% |
| CAGRi | +12.04% | +9.81% | |
| Volatilityi | 17.85% | 18.93% | |
| Sharpe ratioi | 0.48 | 0.35 | |
| Sortino ratioi | 0.70 | 0.51 | |
| Max drawdowni | 12.38% | 13.42% | |
| Current drawdowni | 6.86% | 7.79% | |
| Avg drawdowni | 3.04% | 3.63% | |
| Ulcer Indexi | 3.90% | 4.61% | |
| Max daily dropi | 2.68% | 2.95% | |
| Max wkly dropi | 6.65% | 7.29% | |
| 5Y | Growthi | +38.39% | +40.14% |
| CAGRi | +6.72% | +6.99% | |
| Volatilityi | 19.11% | 19.77% | |
| Sharpe ratioi | 0.20 | 0.21 | |
| Sortino ratioi | 0.29 | 0.31 | |
| Max drawdowni | 24.72% | 25.50% | |
| Current drawdowni | 6.86% | 7.79% | |
| Avg drawdowni | 6.86% | 6.84% | |
| Ulcer Indexi | 8.52% | 8.60% | |
| Max daily dropi | 6.26% | 6.11% | |
| Max wkly dropi | 13.94% | 13.49% | |
| 10Y | Growthi | +159.35% | +154.82% |
| CAGRi | +10.00% | +9.81% | |
| Volatilityi | 20.69% | 21.24% | |
| Sharpe ratioi | 0.35 | 0.34 | |
| Sortino ratioi | 0.49 | 0.47 | |
| Max drawdowni | 37.27% | 41.13% | |
| Current drawdowni | 6.86% | 7.79% | |
| Avg drawdowni | 6.37% | 6.93% | |
| Ulcer Indexi | 8.41% | 9.19% | |
| Max daily dropi | 11.01% | 11.07% | |
| Max wkly dropi | 20.92% | 21.38% |
| Category | XLB | VAW |
|---|---|---|
| Fund name | State Street Materials Select Sector SPDR ETF | Vanguard Materials Index Fund ETF Shares |
| Type | ETF | ETF |
| Expense ratioi | 0.08% | 0.09% |
| Total assets (AUM)i | $8.75B | $4.54B |
| Dividend yieldi | 1.61% | 1.34% |
- Low 0.09% expense ratio with high liquidity: XLB is the most traded materials ETF with tight bid-ask spreads — preferred for short-term tactical positioning in materials
- Industrial gas weighting (Linde) provides stability: Linde's infrastructure-like industrial gas business provides less cyclical earnings vs pure commodity materials companies
- S&P 500 large-cap quality filter: only S&P 500 companies qualify for XLB — ensuring large-cap quality and financial strength vs smaller materials companies
- 115+ holdings vs XLB's 28: VAW's broader holding base includes small and mid-cap materials companies — providing better diversification across the full US materials sector
- Small-cap materials growth exposure: smaller specialty chemical and materials companies in VAW's portfolio may offer higher growth rates than the large-cap Linde/Air Products focused XLB
- Same low expense ratio with broader coverage: VAW charges 0.10% for broader materials coverage — essentially the same cost as XLB for meaningfully more diversification
- Linde concentration at 20%+: XLB's single-stock concentration in Linde means XLB performance heavily tracks one industrial gas company — reducing diversification benefits
- Limited small/mid-cap materials exposure: XLB excludes smaller materials companies (specialty chemicals, smaller miners) that may offer higher growth than large-cap peers
- Commodity price cyclicality: Freeport-McMoRan, Newmont, and steel/chemical companies create cyclical earnings tied to copper, gold, and industrial production cycles
- Lower liquidity than XLB: VAW has lower trading volume than XLB — slightly wider bid-ask spreads for short-term tactical positions
- Small-cap materials higher risk: smaller materials companies in VAW face more financial stress in commodity downturns vs the large-cap industrial gas companies that provide XLB's stability
- MSCI index methodology vs S&P methodology creates minor composition differences that may matter for specific investor use cases
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