Vanguard Materials Index Fund Admiral Shares VMIAX

Vanguard Materials Index Admiral holds a quantitatively derived Gold Morningstar Medalist Rating. The rating reflects that it has scored particularly well on factors Morningstar research associates with future outperformance relative to category peers.

People: Above Average

Note: This share class' People Pillar rating and analysis are inherited from an analyst-covered share class under the same Strategy Provider Company (rolled up to Branding Name) and Morningstar Category Broad Group: Vanguard FTSE All-Wld ex-US SmCp ETF (SecID: FOUSA08NFZ).

Process: Above Average

The fund is fairly diversified and largely represents the US Fund Natural Resources category's opportunity set. Available data suggests that the fund should be able to efficiently track its benchmark index. Historically, the US Fund Natural Resources category has been one of the best places for passive investing.

Performance (in US Dollar)

Over the past 12 months, Vanguard Materials Index Admiral share class returned 27%, underperforming both its category index, the S&P Global Natural Resources TR USD Index (49.9%), and its Morningstar category peers (62.3%). Across the 10-year period, the fund returned 10.4% per year, underperforming the index (11% per year) while mirroring its Morningstar Category average (10.3% per year).

Price

Vanguard Materials Index Admiral's Prospectus Adjusted Expense Ratio is 0.09% per year. It places it in the cheapest quintile of the Morningstar US Fund Natural Resources Category, where the median fee is 0.75% per year. This cost positioning translates into a Medalist Rating Price Score of 2.37, which reflects its relative price positioning within the category. The Price Score ranges from -2.50 (most expensive) to +2.50 (cheapest), with higher scores indicating better cost competitiveness.

Vanguard Materials Index Admiral is assigned an Above Average Process rating. Morningstar's algorithmically assigned Passive Process ratings are first derived by comparing the historical efficacy of passive investments relative to active peers. For equity funds, this category-level score is then adjusted based on the fund's characteristics, including its ability to diversify risk and represent the category's opportunity set. Funds whose benchmark index may be difficult to track are penalized, as this can affect tracking performance. For consistency, the model averages the algorithmic Process scores across all funds tracking the same benchmark. Each fund in that group receives the same final Process score, ensuring the rating reflects all available data.

Representativeness

The fund largely represents the Natural Resources category's opportunity set.

Diversification

The fund is fairly diversified, either based on its top-holdings exposure or its number of equity positions relative to the category average.

Tracking Approach

Available data suggests that the fund should be able to efficiently track its benchmark index.

Active versus Passive

Historically, the Natural Resources category has been one of the best places for passive investing.

Investment Strategy

The investment strategy as stated in the prospectus is: the investment seeks to track the performance of the MSCI US Investable Market Index (IMI)/Materials 25/50. The fund employs an indexing investment approach designed to track the performance of the index, an index made up of stocks of large, mid-size, and small U.S. companies within the materials sector, as classified under the GICS. The Advisor attempts to replicate the target index by seeking to invest all, or substantially all, of its assets in the stocks that make up the index, in order to hold each stock in approximately the same proportion as its weighting in the index. The fund is non-diversified.

Vanguard's equity index group earns an Above Average People Pillar rating for its well-supported and stable management team that's adept at leveraging Vanguard's comprehensive resources. Its portfolio managers benefit from the firm's global infrastructure and advanced portfolio management technology, which facilitates cost-efficient trading around the globe. The infrequent turnover of managers, coupled with Vanguard's practice of rotating them across various funds, enhances their expertise and understanding of different market segments.

The fund's managers directly handle trading, providing them with deeper insights into the portfolio's operations than a stand-alone trader might have. They are backed by a global team of dedicated personnel and employ sophisticated, scalable technology to minimize their workload and enhance tracking accuracy. Vanguard's independent risk management team plays a crucial role in ensuring its funds adhere to predetermined tracking tolerances. It collaborates closely with the managers to oversee trades and address potential issues proactively. Vanguard compensates managers based on tracking error and excess return metrics to foster a culture of accountability and ensure that the management team's interests are closely tied to investors'.

Note: This share class' People Pillar rating and analysis are inherited from an analyst-covered share class under the same Strategy Provider Company (rolled up to Branding Name) and Morningstar Category Broad Group: Vanguard FTSE All-Wld ex-US SmCp ETF (SecID: FOUSA08NFZ).

Vanguard maintains its High Parent Pillar rating as it continues to grow under new leadership.

CEO Salim Ramji has had a busy first year captaining Vanguard’s crew, and the ship remains pointed in the right direction. The firm made its largest round of fee cuts in early 2025, which came at an estimated cost of USD 350 million. It established a separate division dedicated to its advice and wealth management efforts, a sign that it wants to seriously compete within those lines of business. Asset growth has continued to be a huge success. Only BlackRock’s inflows rival the money Vanguard is taking in. Likewise, the number of clients it serves has more than doubled since 2015.

Despite that success, an ever-growing number of clients has presented a challenge: Vanguard can’t grow its services fast enough to keep up with demand. In some instances, it has had to curb certain services and capabilities or raise fees on others to cope, causing some loyal clients to criticize what they perceive as deteriorating services.

Vanguard has ambitions to bring its disruptive legacy to the bond market. It created roughly a dozen low-cost bond exchange-traded funds for US investors and several others abroad over the 12 months through June 2025. All have low fees in their respective categories, and the actively managed strategies align with Vanguard’s philosophy. They are relatively easy to understand and are conservatively managed.

Vanguard has another opportunity to prove that clients are still its priority. On the surface, its endeavor into the high-fee deal-making world of private assets alongside Wellington and Blackstone looks like a cultural mismatch. So far, the collaboration hasn’t produced anything that’s concerning.

Note: This share class' Parent Pillar rating is analyst-driven, as its Branding Name, Vanguard (Branding Name ID: BN00000AAL), is covered by Morningstar Manager Research.

Performance is evaluated in US Dollar, measured to the end of April 2026.

Short-Term Performance

Over the past 12 months, Vanguard Materials Index Admiral share class returned 27%, underperforming its category index, the S&P Global Natural Resources TR USD Index (49.9%), and its Morningstar category peers (62.3%). Over the three-year period, it returned 11.5% per year, trailing both the index (14% per year) and its Morningstar category peers (17.1% per year).

Long-Term Performance

Over five years, the fund returned 6.9% per year, underperforming the index (12% per year) and its Morningstar Category average (11.6% per year). Across 10 years, the fund returned 10.4% per year, below the index (11% per year) but mirroring its Morningstar Category average (10.3% per year).

Vanguard Materials Index Admiral's Prospectus Adjusted Expense Ratio is 0.09% per year. It places it in the cheapest quintile of the Morningstar US Fund Natural Resources Category, where the median fee is 0.75% per year. This cost positioning translates into a Medalist Rating Price Score of 2.37, which reflects its relative price positioning within the category. The Price Score ranges from -2.50 (most expensive) to +2.50 (cheapest), with higher scores indicating better cost competitiveness.