Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the telecommunications industry to thrive as we continue demanding more and more smartphones and other electronic devices, the Vanguard Telecom Services ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The telecom ETF's expense ratio -- its annual fee -- is a low 0.24%.
This ETF has performed reasonably well, beating the S&P 500 over the past three years, on average, but lagging it by a smidge over the past five. 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 21%, 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. Level 3 Communications
Other companies didn't add as much to the ETF's returns last year, but could have an effect in the years to come. Rural telecoms Frontier Communications
The big picture
Demand for telecom 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.