Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the solar energy industry to thrive as we finally develop alternatives to oil and gas, the Guggenheim Solar ETF (NYSE: TAN) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The solar ETF's expense ratio -- its annual fee -- is 0.75%, which is a bit on the steep side for an ETF but still lower than many stock mutual funds.

This ETF has performed disappointingly so far over the past three years. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

With a low turnover rate of 17%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.

What's in it?
Some of this ETF's components made strong contributions to its performance over the past year. GT Advanced Technologies (Nasdaq: GTAT) gained 47% and recently reported strong growth, though some are wondering whether slowing growth at customers such as LDK Solar (NYSE: LDK) and Trina Solar (NYSE: TSL) will hurt the company. (GT recently changed its name from GT Solar.)

Other companies pulled the ETF's return down last year, but could have a positive effect in the years to come. Chinese wafer maker ReneSola (NYSE: SOL), for instance, shed about 49% of its value. Along with fellow wafer and cell suppliers LDK Solar and JA Solar (Nasdaq: JASO), it faces some pressure as global demand isn't growing as rapidly as expected.

Yingli Green Energy (NYSE: YGE) lost about 39%, but recently noted increased expected shippings. Like Trina Solar, it's vertically integrated, protecting it somewhat, and both companies have strong margins affording them the ability to lower prices a bit when needed.

The big picture
Demand for solar energy is likely to grow … eventually. If you think solar energy's time is coming soon, consider a solar ETF like this one. A well-chosen ETF can grant you instant diversification across the industry -- and make investing in and profiting from the sector that much easier.

ETFs can help you find the way to better investing results. To find some great ETF investing ideas, take a look at The Motley Fool's special free report, " 3 ETFs Set to Soar During the Recovery ."