# VAW alternatives: 5 similar ETFs compared

> ETFs similar to VAW, closest first, with each fund's fee, what it tracks, and returns and worst drops on the same dates as VAW. Updated daily.

The ETFs most like VAW are XLB, VIS and XLI. XLB holds US makers of chemicals, metals, paper and packaging, like VAW. XLB costs less: 0.08% a year against 0.09%.

Written by [the Tactfolio research team](https://tactfolio.com/about/editorial-policy). Fund facts checked October 17, 2026. Prices through October 16, 2026.

## Key points

- 5 funds can stand in for VAW: 1 of the same kind and 4 related funds.
- VAW charges 0.09% a year (about $9 on $10,000). The cheapest alternative here, XLB, charges 0.08%.
- XLB moved most like VAW: a daily correlation of 0.99 over about the last five years.
- Returns and drops for each pair use the same dates for both funds.

## VAW alternatives at a glance

Each fund below can stand in for VAW, closest first. "Same kind" funds hold the same kind of stocks through a different index. "Related" funds make a different bet that often moves the same way.

| ETF | How close | Yearly fee | Fee on $10,000 | Tracks |
| --- | --- | --- | --- | --- |
| **VAW** | This fund | 0.09% | $9 | MSCI US Investable Market Materials 25/50 Index |
| [XLB](https://tactfolio.com/etf/xlb.md) | Same kind of fund | 0.08% | $8 | Materials Select Sector Index |
| [VIS](https://tactfolio.com/etf/vis.md) | Related fund | 0.09% | $9 | MSCI US Investable Market Industrials 25/50 Index |
| [XLI](https://tactfolio.com/etf/xli.md) | Related fund | 0.08% | $8 | Industrial Select Sector Index |
| [VDE](https://tactfolio.com/etf/vde.md) | Related fund | 0.09% | $9 | MSCI US Investable Market Energy 25/50 Index |
| [XLE](https://tactfolio.com/etf/xle.md) | Related fund | 0.08% | $8 | Energy Select Sector Index |

Fees come from each fund company, checked on the dates shown on each fund's page.

## How VAW and its alternatives did over the same dates

Each row measures the alternative and VAW on the days both traded, so neither gets a head start. Correlation shows how closely their daily moves matched over about the last five years. A value of 1 means they always moved together.

| ETF | Moves with VAW | Per year | VAW per year | Worst drop | VAW worst drop | Since |
| --- | --- | --- | --- | --- | --- | --- |
| [XLB](https://tactfolio.com/etf/xlb.md) | 0.99 | 8.6% | 8.9% | −59.8% | −62.2% | January 2004 |
| [VIS](https://tactfolio.com/etf/vis.md) | 0.85 | 10.5% | 8.7% | −63.5% | −62.2% | September 2004 |
| [XLI](https://tactfolio.com/etf/xli.md) | 0.84 | 10.4% | 8.9% | −62.3% | −62.2% | January 2004 |
| [VDE](https://tactfolio.com/etf/vde.md) | 0.46 | 8.8% | 8.7% | −74.7% | −62.2% | September 2004 |
| [XLE](https://tactfolio.com/etf/xle.md) | 0.45 | 10.2% | 8.9% | −71.3% | −62.2% | January 2004 |

Prices through October 16, 2026. Figures use daily closing prices adjusted for splits, with dividends reinvested. They do not include taxes or the cost of buying and selling. Past results do not tell you what will happen next.

## Each VAW alternative, compared

### XLB: State Street Materials Select Sector SPDR ETF

XLB also holds US makers of chemicals, metals, paper and packaging. It tracks the Materials Select Sector Index, while VAW tracks the MSCI US Investable Market Materials 25/50 Index.

It charges 0.08% a year, about $8 on $10,000, against $9 for VAW. It held 24 stocks, against 110 for VAW.

From January 2004 to October 2026, XLB returned about 8.6% a year and VAW returned about 8.9% a year. Over about the last five years they moved almost exactly together (correlation 0.99).

Read the [XLB fund page](https://tactfolio.com/etf/xlb.md) for its returns by year and worst drop.

### VIS: Vanguard Industrials ETF

VIS is a looser match. It holds US makers of machines and airplanes, railroads and other industrial companies, while VAW holds US makers of chemicals, metals, paper and packaging.

It charges 0.09% a year, about $9 on $10,000, against $9 for VAW. It held 396 stocks, against 110 for VAW.

From September 2004 to October 2026, VIS returned about 10.5% a year and VAW returned about 8.7% a year. Over about the last five years they moved together on most days (correlation 0.85).

Read the [VIS fund page](https://tactfolio.com/etf/vis.md) for its returns by year and worst drop.

### XLI: State Street Industrial Select Sector SPDR ETF

XLI is a looser match. It holds US makers of machines and airplanes, railroads and other industrial companies, while VAW holds US makers of chemicals, metals, paper and packaging.

It charges 0.08% a year, about $8 on $10,000, against $9 for VAW. It held 83 stocks, against 110 for VAW.

From January 2004 to October 2026, XLI returned about 10.4% a year and VAW returned about 8.9% a year. Over about the last five years they often moved together, but not always (correlation 0.84).

Read the [XLI fund page](https://tactfolio.com/etf/xli.md) for its returns by year and worst drop.

### VDE: Vanguard Energy ETF

VDE is a looser match. It holds US oil, gas and other energy companies, while VAW holds US makers of chemicals, metals, paper and packaging.

It charges 0.09% a year, about $9 on $10,000, against $9 for VAW. It held 111 stocks, against 110 for VAW.

From September 2004 to October 2026, VDE returned about 8.8% a year and VAW returned about 8.7% a year. Over about the last five years they often moved in different ways (correlation 0.46).

Read the [VDE fund page](https://tactfolio.com/etf/vde.md) for its returns by year and worst drop.

### XLE: State Street Energy Select Sector SPDR ETF

XLE is a looser match. It holds US oil, gas and other energy companies, while VAW holds US makers of chemicals, metals, paper and packaging.

It charges 0.08% a year, about $8 on $10,000, against $9 for VAW. It held 21 stocks, against 110 for VAW.

From January 2004 to October 2026, XLE returned about 10.2% a year and VAW returned about 8.9% a year. Over about the last five years they often moved in different ways (correlation 0.45).

Read the [XLE fund page](https://tactfolio.com/etf/xle.md) for its returns by year and worst drop.

## VAW versions from other fund companies

Some people keep all their funds with one company. Here is the closest fund to VAW from each other company on this page:

- **SPDR (State Street):** [XLB](https://tactfolio.com/etf/xlb.md), State Street Materials Select Sector SPDR ETF (same kind of fund, 0.08% a year)

Most brokers let you buy any ETF, whoever runs it. Mutual fund versions, such as a fund company's index mutual fund, are not listed here.

## How to choose between VAW and its alternatives

- **What it tracks.** A fund on the same index holds the same stocks. A different index can mean different weights, more or fewer holdings, or a different mix.
- **The fee.** The difference is often small. On $10,000, VAW costs about $9 a year. XLB costs about $8.
- **History.** An older fund has been through more bad markets, so you can see how far it fell.
- **What you already own.** Two funds that move together add little variety. A fund with a low correlation behaves more on its own.

## Swapping VAW to harvest a tax loss

Some investors sell a fund at a loss to lower their taxes, then buy a similar fund so they stay invested. This is called tax-loss harvesting.

The IRS wash sale rule blocks the loss if you buy a "substantially identical" security within 30 days before or after the sale. The IRS has not said exactly when two funds count. Funds on the same index are more likely to. Funds on a different index, such as XLB, VIS or XLI, are less likely to.

Ask a tax professional before you rely on this. Read the IRS rules in [Publication 550](https://www.irs.gov/publications/p550).

## Test VAW and its alternatives in a backtest

Tactfolio is a platform where you build rules-based investing strategies, backtest them on decades of real prices, share them, and run them automatically in your own Alpaca account. Open the [builder](https://tactfolio.com/builder), add VAW and XLB, and see how each would have done on the same dates, or how a mix of both would have done.

## The details

Alternatives are picked from facts, not from returns. First come funds that track the same index as VAW. Then come funds that hold the same kind of stocks through another index. Last come funds from a close category that make a different bet. Leveraged funds are only listed as alternatives to other leveraged funds.

Within each group, the funds whose daily returns moved most like VAW over about the last five years come first. Returns and worst drops use Tactfolio's stored daily prices, adjusted for splits, with dividends reinvested. Each alternative is measured with VAW only on days both traded. Read [what a backtest simulates](https://tactfolio.com/docs/backtests.md) for more on these measures.

## Research and test it

- [S&P 500 index](https://tactfolio.com/learn/sp500-index): The S&P 500 tracks about 500 large US companies. Learn how stocks get in, how the index is weighted, how to invest in it, and how far it has fallen before.
- [What is an ETF](https://tactfolio.com/learn/what-is-an-etf): An ETF is a fund that trades like a stock. Learn how ETFs work, what they cost, the main types, and the risks, with SEC sources.
- [ETF screener](https://tactfolio.com/screener.md): A free ETF screener for 162 US-listed funds. Filter by type, issuer and fee, sort by returns or worst drop, and compare funds side by side.
- [ETF expense ratio](https://tactfolio.com/learn/etf-expense-ratio): What an ETF expense ratio is, how the fund charges it, and how 0.03% vs 1% adds up over 10 and 30 years, with real fund examples.
- [Backtest a portfolio](https://tactfolio.com/trading-tools/backtest-portfolio): Backtest a portfolio of US stocks and ETFs. Enter tickers and shares, pick when to rebalance, and get the results with a link to share.
- [Backtesting](https://tactfolio.com/backtesting): Free backtesting software for stocks, ETFs, and crypto perps.

## Common questions

### What ETF is most similar to VAW?

XLB is the closest. XLB also holds US makers of chemicals, metals, paper and packaging. It tracks the Materials Select Sector Index, while VAW tracks the MSCI US Investable Market Materials 25/50 Index. Over about the last five years they moved almost exactly together.

### Is there a cheaper alternative to VAW?

Yes. XLB charges 0.08% a year, XLI charges 0.08% a year and XLE charges 0.08% a year, against 0.09% for VAW. On $10,000 that is about $8 a year instead of $9.

### Is VAW or XLB better?

Neither is better for everyone. From January 2004 to October 2026, VAW returned about 8.9% a year and XLB returned about 8.6% a year. VAW charges 0.09% a year and XLB charges 0.08%. Past returns do not tell you what comes next.

### What if I had put $10,000 in VAW 10 years ago?

It would have grown to about $26,008 by October 16, 2026, with dividends reinvested. That is about 10.0% a year. Past returns do not tell you what comes next.

## Sources

- [Vanguard: Vanguard Materials ETF fund page](https://investor.vanguard.com/investment-products/etfs/profile/vaw)
- [SPDR (State Street): State Street Materials Select Sector SPDR ETF fund page](https://www.ssga.com/us/en/intermediary/etfs/state-street-materials-select-sector-spdr-etf-xlb)
- [Vanguard: Vanguard Industrials ETF fund page](https://investor.vanguard.com/investment-products/etfs/profile/vis)
- [SPDR (State Street): State Street Industrial Select Sector SPDR ETF fund page](https://www.ssga.com/us/en/intermediary/etfs/state-street-industrial-select-sector-spdr-etf-xli)
- [Vanguard: Vanguard Energy ETF fund page](https://investor.vanguard.com/investment-products/etfs/profile/vde)
- [SPDR (State Street): State Street Energy Select Sector SPDR ETF fund page](https://www.ssga.com/us/en/intermediary/etfs/state-street-energy-select-sector-spdr-etf-xle)
- [IRS Publication 550: wash sales](https://www.irs.gov/publications/p550)

> Not financial advice. Tactfolio is a research and automation tool. It is not a broker or a financial adviser. This page is for education only. Backtests are hypothetical. They show how rules would have done on past prices, not how they will do. All investing involves risk, including losing the money you put in.