What are broad materials ETFs?
Materials companies make the raw ingredients that other industries depend on: chemicals, industrial gases, metals, fertilizers, paint, cement and gravel, and packaging. The 13 US-listed ETFs in this guide own or track those businesses. Linde is the largest holding in XLB, VAW, IYM and FMAT, at 14% to 20% of each fund. Newmont, Freeport-McMoRan, Air Products and Chemicals and Nucor each appear in 8 of the 13 funds. Ecolab and Steel Dynamics appear in 7, and Sherwin-Williams and Corteva in 6.
Every fund here tracks an index, so none is actively managed. The four biggest, XLB, VAW, IYM and FMAT, give the largest companies the most weight, so their top 10 holdings make up 56% to 68% of assets. Others take different routes. RSPM gives each of its 26 stocks a roughly equal share, and PSCM holds small companies. FXZ and PYZ pick stocks with quantitative and momentum rules. MXI adds overseas companies such as BHP, Rio Tinto and Air Liquide. SETM and TINT follow narrower themes: critical materials and smart materials. UYM aims for twice the sector's daily move, and SMN aims for twice the opposite.
The expense ratio is the yearly fee taken from fund assets. The median fund charges 0.40%. XLB is the cheapest at 0.08%, with FMAT at 0.084% and VAW at 0.09% close behind. Theme and strategy funds cost more, such as SETM at 0.65% and FXZ at 0.64%. The two leveraged funds, UYM and SMN, charge the most at 0.95%.
Most of the money sits in a few funds. The five largest, XLB, VAW, IYM, FMAT and SETM, hold 93.6% of the group's assets, and XLB is the biggest by a wide margin. Several others, including TINT and SMN, hold only a few million dollars.
Broad materials ETF holdings: the stocks most funds own
The stocks that show up most often among the largest positions of the 13 biggest broad materials ETFs with holdings reports, from their latest N-PORT filings.
| Stock | Funds holding it | Typical weight |
|---|---|---|
| Newmont Corp | 8 of 13 | 5.44% |
| Freeport-McMoRan Inc | 8 of 13 | 5.3% |
| Air Products and Chemicals Inc | 8 of 13 | 3.93% |
| Nucor Corp | 8 of 13 | 3.78% |
| Ecolab Inc | 7 of 13 | 4.64% |
| Steel Dynamics Inc | 7 of 13 | 3.13% |
| Sherwin-Williams Co | 6 of 13 | 4.13% |
| Corteva Inc | 6 of 13 | 3.56% |
| Cf Industries Holdings, Inc. | 4 of 13 | 3.23% |
| Vulcan Materials Co | 4 of 13 | 2.36% |
| Martin Marietta Materials Inc | 4 of 13 | 2.13% |
| PPG Industries Inc | 4 of 13 | 1.67% |
Typical weight is the median share of each fund’s assets in the stock, among the funds that hold it in their 25 largest positions.
The largest broad materials ETFs, side by side
Swipe the table to see all 5 funds.
| XLB | VAW | IYM | FMAT | SETM | |
|---|---|---|---|---|---|
| Net assets | $8.17B | $4.55B | $1.16B | $578.7M | $574.9M |
| Expense ratio | 0.08% | 0.09% | 0.37% | 0.08% | 0.65% |
| Holdings | 26 | 110 | 39 | 101 | 158 |
| In the 10 largest | 58.37% | 57.78% | 67.54% | 56.26% | 41.91% |
| Biggest holding | Linde PLC (14.06%) | Linde PLC (14.62%) | Linde Public Limited Company (20.35%) | Linde PLC (14.94%) | Freeport-mcmoran Inc (5.37%) |
| Yield | 1.66% | 1.4% | 1.27% | 1.41% | 1.73% |
| 1-year return | +18.5% | +13.9% | +24.9% | +13.8% | +2.4% |
| 3 years, a year | -10.3% | +13.3% | +16.2% | +13.3% | +19.4% |
| 5 years, a year | -8.2% | +6.0% | +8.3% | +6.1% | — |
| Worst drop, past year | -12.4% | -13.4% | -13.6% | -13.5% | -38.2% |
| Launched | 1998 | 2004 | 2000 | 2013 | 2023 |
The largest ordinary funds by net assets (leveraged and inverse funds are listed further down). Holdings from each fund’s latest N-PORT report; returns include reinvested distributions, as of Oct 27, 2026.
Head to head
XLB vs VAW
State Street's XLB tracks the Materials Select Sector Index with just 26 stocks. Vanguard's VAW holds 110, including many smaller companies. Their largest holdings look alike: Linde is 14.1% of XLB and 14.6% of VAW, and the top 10 make up 58.4% and 57.8%. They share 72.2% of their assets. Costs are 0.08% and 0.09%. Over the year to October 27, 2026, XLB returned 18.5% and VAW 13.9%. Their worst peak-to-low falls were 12.4% and 13.4%. XLB may suit investors who want only the largest names, and VAW those who want smaller companies too.
VAW vs FMAT
These two are near twins. Vanguard's VAW holds 110 stocks. Fidelity's FMAT tracks the MSCI USA IMI Materials 25/50 Index and holds 101. They share 97 stocks and 94.9% of their assets. Linde is 14.6% of VAW and 14.9% of FMAT, and the top 10 make up 57.8% and 56.3%. FMAT costs 0.084% against VAW's 0.09%. Over the year to October 27, 2026, they returned 13.9% and 13.8%, with worst drops of 13.4% and 13.5%. VAW is much larger. Owning both adds little, so investors may weigh fund size or which brokerage they use.
XLB vs SETM
This pair barely overlaps: 2 stocks and 7.4% of assets in common. XLB holds 26 stocks, led by Linde at 14.1%, with 58.4% in its top 10. Sprott's SETM tracks the Nasdaq Sprott Critical Materials Index across 158 global stocks. Freeport-McMoRan leads at 5.4%, ahead of Kazatomprom, Lynas Rare Earths and Cameco, and the top 10 make up 41.9%. SETM costs 0.65% versus 0.08%. Over the year to October 27, 2026, SETM returned 2.4% to XLB's 18.5%, with a worst drop of 38.2% versus 12.4%. SETM may suit investors wanting a narrow theme, and XLB those wanting the broad sector.
How much do the largest broad materials ETFs overlap?
Owning two funds that hold the same stocks adds little diversification. Overlap here is the share of assets two funds have in common: for each stock both own, the smaller of its two weights, added up.
| Funds | Assets in common | Shared holdings | |
|---|---|---|---|
| VAW and FMAT | 94.9% | 97 | |
| XLB and FMAT | 75% | 26 | |
| XLB and VAW | 72.2% | 25 | |
| VAW and IYM | 61.7% | 29 | |
| IYM and FMAT | 59.2% | 29 | |
| XLB and IYM | 53.1% | 14 | |
| IYM and SETM | 10.1% | 5 | |
| VAW and SETM | 7.8% | 5 | |
| FMAT and SETM | 7.5% | 7 | |
| XLB and SETM | 7.4% | 2 |
From each fund’s full holdings in its latest N-PORT report.
How have broad materials ETFs performed?
The five largest ordinary funds: growth from the start of the range, distributions reinvested. The dashed gray line is the S&P 500 (SPY).
Best-performing broad materials ETFs over the past year
| # | Fund | Net assets | Cost | 1 mo | YTD | 1 yr | 3 yr |
|---|---|---|---|---|---|---|---|
| 1 | IYM iShares U.S. Basic Materials ETF | $1.16B | 0.37% | -0.7% | +18.9% | +24.9% | +16.2% |
| 2 | FXZ First Trust Materials AlphaDEX Fund | $368.2M | 0.64% | -4.2% | +19.1% | +24.0% | +10.5% |
| 3 | RSPM Invesco S&P 500 Equal Weight Materials ETF | $177.6M | 0.4% | +3.7% | +17.6% | +21.6% | +12.8% |
| 4 | MXI iShares Global Materials ETF | $339.6M | 0.37% | -1.1% | +13.0% | +20.2% | +15.8% |
| 5 | XLB Materials Select Sector SPDR Fund | $8.17B | 0.08% | +4.0% | +15.6% | +18.5% | -10.3% |
| 6 | VAW Vanguard Materials ETF | $4.55B† | 0.09% | +1.6% | +10.6% | +13.9% | +13.3% |
| 7 | FMAT Fidelity MSCI Materials Index ETF | $578.7M | 0.08% | +1.5% | +10.4% | +13.8% | +13.3% |
| 8 | PYZ Invesco Dorsey Wright Basic Materials Momentum ETF | $72.1M | 0.6% | -2.2% | +3.4% | +6.6% | +17.0% |
| 9 | SETM Sprott Critical Materials ETF | $574.9M | 0.65% | -14.4% | -9.9% | +2.4% | +19.4% |
Funds with at least $25 million in net assets; leveraged and inverse funds left out. Past returns don’t predict future returns.
How broad materials ETFs did in past market crashes
| Fund | 2008 crash | 2020 crash | 2022 drop |
|---|---|---|---|
| XLB | -57.5% | -36.4% | -22.7% |
| VAW | not yet launched | not yet launched | -21.5% |
| IYM | -61.1% | -37.6% | -19.7% |
| FMAT | not yet launched | -37.5% | -21.4% |
| SETM | not yet launched | not yet launched | not yet launched |
| S&P 500 (SPY) | -55.2% | -33.7% | -24.5% |
Total return from the stock market’s peak to its low in each fall, distributions reinvested.
What drives broad materials ETFs?
Materials companies sell the basic inputs of the economy, so their profits rise and fall with factory output, construction, farming and global trade. Prices for what they sell, such as copper, gold, steel, fertilizer and chemicals, can swing widely. Many of these firms also have high fixed costs, so a modest change in prices can mean a large change in profit. Energy is a big input cost for chemical makers and steel mills. Interest rates matter through housing and building activity, and a strong dollar can make US exports less competitive. Mining companies feel commodity prices most, while paint and specialty chemical makers depend more on industrial and consumer demand.
That sensitivity has shown up in past sell-offs. In the 2008 financial crisis, XLB fell 57.5% and IYM 61.1%, more than the S&P 500's 55.2%. In the 2020 COVID crash, XLB dropped 36.4%, FMAT 37.5% and IYM 37.6%, against 33.7% for the S&P 500. The 2022 bear market was different. XLB fell 22.7%, VAW 21.5%, FMAT 21.4% and IYM 19.7%, all less than the S&P 500's 24.5%. SETM launched in 2023, so it has no record through these downturns.
Broad materials ETFs with the lowest expense ratios
| # | Fund | Expense ratio | On $10,000 | Net assets |
|---|---|---|---|---|
| 1 | XLB Materials Select Sector SPDR Fund | 0.08% | $8 a year | $8.17B |
| 2 | FMAT Fidelity MSCI Materials Index ETF | 0.08% | $8 a year | $578.7M |
| 3 | VAW Vanguard Materials ETF | 0.09% | $9 a year | $4.55B |
| 4 | PSCM Invesco S&P SmallCap Materials ETF | 0.29% | $29 a year | $21.1M |
| 5 | IYM iShares U.S. Basic Materials ETF | 0.37% | $37 a year | $1.16B |
Ordinary funds with at least $10 million in net assets. The median ordinary broad materials ETF charges 0.37% a year; leveraged and inverse funds usually charge more.
Do broad materials ETFs pay dividends?
11 of the 11 ordinary broad materials ETFs with a page here paid distributions over the last 12 months, with a median yield of 1.4%.
| Highest yields | Yield | Net assets |
|---|---|---|
| SETM Sprott Critical Materials ETF | 1.73% | $574.9M |
| RSPM Invesco S&P 500 Equal Weight Materials ETF | 1.72% | $177.6M |
| MXI iShares Global Materials ETF | 1.7% | $339.6M |
| XLB Materials Select Sector SPDR Fund | 1.66% | $8.17B |
| FMAT Fidelity MSCI Materials Index ETF | 1.41% | $578.7M |
Distributions over the last 12 months divided by the price; funds with at least $25 million in net assets.
How to choose a broad materials ETF
- Yearly costs vary widely. XLB (0.08%), FMAT (0.084%) and VAW (0.09%) are the cheapest, followed by PSCM (0.29%) and IYM (0.37%). Strategy and theme funds such as SETM (0.65%), FXZ (0.64%) and PYZ (0.60%) charge several times more.
- How much rides on Linde. IYM puts 20.4% in Linde and 67.5% in its top 10 holdings. XLB, VAW and FMAT hold 14% to 15% in Linde. Equal-weight RSPM spreads money evenly across 26 stocks, so its largest holding, International Paper, is 4.7%.
- How each index picks its stocks. The largest funds weight companies by size. FXZ uses the quantitative StrataQuant Materials Index, PYZ favors momentum (strong recent price gains) and PSCM holds small companies. ATI and Carpenter Technology lead PYZ, and Eastman Chemical leads PSCM.
- US-only or worldwide. XLB, IYM and FMAT track US indexes. MXI is global, holding BHP, Rio Tinto and Air Liquide alongside Linde. SETM and TINT also own foreign stocks, such as Kazatomprom, Lynas Rare Earths, Sika and Akzo Nobel, which adds currency swings.
- Fund size affects trading and survival. XLB and VAW are by far the largest, which usually means tighter bid-ask spreads (the gap between buying and selling prices). TINT, SMN and PSCM are tiny. Small funds can trade less smoothly and are more likely to close.
- Leveraged and inverse funds behave differently. UYM seeks twice the sector index's daily move and SMN twice the opposite, both at 0.95%. Because they reset daily, results over months can stray far from 2x or -2x, which makes them short-term trading tools.
What are the risks of broad materials ETFs?
- One stock carries heavy weight. Linde makes up 14% to 20% of XLB, VAW, IYM and FMAT, and IYM's top 10 holdings are 67.5% of the fund. Trouble at one or two companies can move these funds noticeably.
- Metal prices drive key holdings. Newmont, Freeport-McMoRan, Nucor and Steel Dynamics each appear in 7 or 8 of the 13 funds. Their earnings depend heavily on metal prices, which can drop sharply when global demand slows.
- Deeper falls than the market in crashes. In the 2008 crisis, XLB fell 57.5% and IYM 61.1%, versus 55.2% for the S&P 500. In the 2020 crash, XLB, FMAT and IYM each lost more than 36%, against 33.7% for the S&P 500.
- Narrow themes swing much harder. Over the year to October 27, 2026, SETM's volatility (how much returns bounce around) was 46.4%, and it fell as much as 38.2%. XLB's figures were 17.7% and 12.4%. PYZ, at 26.3% volatility, also swung more.
- Leverage resets daily and compounds. UYM aims for twice the sector's daily move. Over the year to October 27, 2026, it gained 28.8%, well short of twice XLB's 18.5%, and fell as much as 23.9%. Daily resetting and costs explain the gap.
Leveraged and inverse broad materials ETFs (2x)
These funds aim for a multiple, or the opposite, of one day’s return, and reset every day. Held for longer than a day, their results can drift far from that multiple, especially when prices swing. They are trading tools, not long-term holdings. Why leveraged ETFs decay →
List of all broad materials ETFs, by size
| # | Fund | Net assets | Cost | Yield | YTD | 1 yr | 5 yr |
|---|---|---|---|---|---|---|---|
| 1 | XLB Materials Select Sector SPDR Fund | $8.17B | 0.08% | 1.66% | +15.6% | +18.5% | -8.2% |
| 2 | VAW Vanguard Materials ETF | $4.55B† | 0.09% | 1.4% | +10.6% | +13.9% | +6.0% |
| 3 | IYM iShares U.S. Basic Materials ETF | $1.16B | 0.37% | 1.27% | +18.9% | +24.9% | +8.3% |
| 4 | FMAT Fidelity MSCI Materials Index ETF | $578.7M | 0.08% | 1.41% | +10.4% | +13.8% | +6.1% |
| 5 | SETM Sprott Critical Materials ETF | $574.9M | 0.65% | 1.73% | -9.9% | +2.4% | — |
| 6 | FXZ First Trust Materials AlphaDEX Fund | $368.2M | 0.64% | 1.33% | +19.1% | +24.0% | +7.0% |
| 7 | MXI iShares Global Materials ETF | $339.6M | 0.37% | 1.7% | +13.0% | +20.2% | +7.4% |
| 8 | RSPM Invesco S&P 500 Equal Weight Materials ETF | $177.6M | 0.4% | 1.72% | +17.6% | +21.6% | — |
| 9 | PYZ Invesco Dorsey Wright Basic Materials Momentum ETF | $72.1M | 0.6% | 0.5% | +3.4% | +6.6% | +6.0% |
| 10 | UYM ProShares Ultra Materials Leveraged | $41.4M | 0.95% | 1.09% | +24.2% | +28.8% | +5.4% |
Questions investors ask about broad materials ETFs
What is the largest materials ETF?
XLB, the Materials Select Sector SPDR Fund from State Street, is the largest, with about $8.2 billion in net assets. It launched on December 16, 1998, and tracks the Materials Select Sector Index with 26 stocks, led by Linde at 14.1%. Vanguard's VAW is second at about $4.5 billion, followed by iShares' IYM at about $1.2 billion. Together with FMAT and SETM, the five largest funds hold 93.6% of the group's assets.
What is the cheapest materials ETF?
XLB is the cheapest, with an expense ratio (the yearly fee, as a share of assets) of 0.08%. Fidelity's FMAT is nearly the same at 0.084%, and Vanguard's VAW charges 0.09%. Next come PSCM at 0.29% and IYM at 0.37%. The median fund costs 0.40%. The leveraged UYM and SMN are the most expensive at 0.95%.
XLB vs VAW: what's the difference between the SPDR and Vanguard materials ETFs?
The main difference is breadth. XLB holds 26 stocks from the Materials Select Sector Index, while Vanguard's VAW holds 110, adding many smaller companies. Even so, 72.2% of their assets overlap, and Linde is 14.1% of XLB and 14.6% of VAW. Costs are close at 0.08% and 0.09%. Over the year to October 27, 2026, XLB returned 18.5% and VAW 13.9%. As of the same date, XLB yielded 1.66% and VAW 1.40%.
Do materials ETFs pay dividends?
Yes. All 11 funds with yield data pay dividends, and the median yield was 1.4% as of October 27, 2026. SETM (1.73%), RSPM (1.72%), MXI (1.70%) and XLB (1.66%) yielded the most. FMAT yielded 1.41%, VAW 1.40% and IYM 1.27%. These are modest payouts, because the funds are built to own materials stocks rather than to produce income.
Which materials ETFs hold Newmont?
Most of the big ones do. Newmont is in 8 of the 13 funds, with a median weight of 5.44%. It makes up 9.28% of IYM, 8.77% of VAW, 6.82% of FMAT and 5.84% of XLB, and it is the second-largest holding in each, after Linde. Freeport-McMoRan, Air Products and Chemicals and Nucor also appear in 8 of the 13 funds.
How many materials ETFs are there?
This guide covers 13 US-listed broad materials ETFs. Eleven are standard, unleveraged index funds. They range from sector trackers such as XLB, VAW, IYM and FMAT to theme and strategy funds such as SETM, TINT, FXZ, PYZ, RSPM, PSCM and the global MXI. The other two, UYM and SMN from ProShares, are leveraged or inverse funds. The five largest funds hold 93.6% of the group's assets.
What are leveraged and inverse materials ETFs?
UYM (ProShares Ultra Materials) seeks twice the daily return of the S&P Materials Select Sector Index. SMN (ProShares UltraShort Materials) seeks twice the opposite, so it gains when materials stocks fall. Both charge 0.95%. Because they reset every day, returns over longer stretches can differ widely from 2x or -2x the index. Over the year to October 27, 2026, UYM gained 28.8%, well short of twice XLB's 18.5%. These funds are built for short-term trading, not long-term holding.
Is there a rare earth or critical materials ETF?
Yes. In this group, SETM, the Sprott Critical Materials ETF, is the fund built around that theme. It tracks the Nasdaq Sprott Critical Materials Index and holds 158 stocks, led by Freeport-McMoRan (5.37%), Kazatomprom (5.33%), Lynas Rare Earths (5.08%) and Cameco (5.07%). It costs 0.65% and launched in February 2023. It swings far more than the broad funds: over the year to October 27, 2026, it returned 2.4%, with a worst drop of 38.2%.
Is there a Vanguard, Fidelity or Schwab materials ETF?
Yes. Vanguard offers one: VAW (Vanguard Materials ETF). Fidelity offers one: FMAT (Fidelity MSCI Materials Index ETF). Schwab doesn’t have a materials ETF.
