Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the Internet to stick around and for companies making the most of it to thrive over time, the PowerShares NASDAQ Internet ETF
The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The PowerShares ETF's expense ratio -- its annual fee -- is 0.60%. That's more expensive than many ETFs but still cheaper than most mutual funds.
This ETF has performed well, but it's also very young (and, it should be noted, still very small), with just two full years on the books. Both in 2009 and in 2010, it more than doubled the S&P 500's return. 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 20%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
Several of this ETF's components made strong contributions to its performance over the past year. Chinese mobile and online specialist Sina
Other companies hurt the ETF's returns last year but could have an effect in the years to come -- or not. Akamai
The big picture
Demand for Internet services isn't going away anytime soon. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.
Learn about the best dividend ETFs. And if you're looking for some great investments beyond ETFs, consider these 10 stocks for your retirement portfolio.