RSPM vs VAW

RSPMCInvesco S&P 500 Equal Weight Materials ETF

VAWBVanguard Materials ETF

In short

RSPM Materials, cut into even slices. RSPM gives every materials stock in the S&P 500 the same weight, so the sector's smallest name counts as much as its largest, and it has run that way since 2006.

VAW Vanguard's materials aisle in one ticker: chemicals, packaging and metals, roughly 120 names deep, for 0.09% a year while the category norm sits several times higher.

Stated mandate

RSPM The fund tracks an index that equally weights stocks in the materials sector of the S&P 500® Index.

VAW The fund seeks to track a materials-sector equity benchmark through passive indexing and normally invests at least 80% of assets in the benchmark's stocks.

Why people hold it

• RSPM Equal weighting is the whole point: each S&P 500 materials name gets the same slice, so a few giant chemical and industrial-gas stocks do not set the tone.invesco.com
• The index resets holdings back toward equal weight instead of letting winners compound into outsized positions, which keeps the tilt toward the sector's smaller members intact.invesco.com
• Trading since 2006 on the same rulebook, through multiple commodity cycles. Distributions come quarterly.
• It stays on task: the portfolio tracks its equal-weight materials index closely rather than wandering into adjacent sectors.

• VAW Charges 0.09% a year, several times below the median for broad materials funds. Cheap enough that cost stops being the argument.
• Holds about 120 stocks from MSCI's US Investable Market materials index, so it reaches down the cap ladder instead of stopping at the biggest names.
• Plain passive indexing, at least 80% in benchmark stocks, and it has tracked that benchmark closely. One of the stronger builds in the materials group.
• Trading since 2004 and now a multi-billion-dollar fund, run by Vanguard's index desk. Distributions arrive quarterly.

Worth knowing

• RSPM At 0.40% a year it runs above the typical materials ETF, and cap-weighted rivals such as XLB and VAW charge a fraction of that for the same sector.
• Thinly traded and modest in size, so bid-ask spreads can be wider than on the sector's most heavily traded funds.
• Around two dozen stocks in one cyclical corner of the market, and equal weighting leans harder on the smaller names than a cap-weighted fund does.

• VAW One sector, and a cyclical one. Chemicals, miners and packagers ride construction and industrial demand, so swings run wider than a total-market fund.
• Moderately traded rather than a volume monster, so spreads can widen in fast markets.
• XLB and FMAT sit a basis point lower at 0.08%. A rounding error, but it exists.

Full RSPM profile⁠

Full VAW profile⁠