Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to invest in a bunch of midsize companies because they tend to be more proven performers than small caps and can grow more rapidly than large caps, the Rydex Russell Mid Cap Equal Weight ETF
The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The Rydex ETF's expense ratio -- its annual fee -- is a relatively low 0.40%.
This ETF doesn't have much of a performance record yet, as it's still less than a year old. It's very small, too, so if you're thinking of buying, beware of occasionally large spreads between its bid and ask prices. You might want to just keep an eye on it as it matures a bit, or you might want to be an early investor. Remember that as with most investments, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.
What's in it?
Several stocks that this ETF follows did very well over the past year. Whole Foods Market
Clorox
Other companies didn't do as well but could bounce back in the years to come. SUPERVALU
The big picture
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 five ETFs that could soar in 2012. And if you're looking for some great investments beyond ETFs, consider these 12 dividend stocks for 2012.