Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the biotech sector to thrive over time as our global population ages and demands more medical treatments, the Market Vectors Biotech ETF
If you're familiar with ETFs and think that the BBH ticker looks familiar, but the fund's name doesn't, you're right. This ETF is one of several replacing Merrill Lynch-based HOLDRs which had some problems that these funds don't.
The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The Market Vectors ETF's expense ratio -- its annual fee -- is a low 0.35%.
This ETF doesn't have much of a performance record yet, as it's just a few weeks old. It's relatively 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 of the companies this ETF includes performed well over the past year. Regeneron Pharmaceuticals surged 137%, for example, buoyed by a huge revenue jump with the successful launch of its age-related macular degeneration drug, Eylea.
Other companies didn't do as well, but could see improvement in the years to come. Amylin Pharmaceuticals
Dendreon
Human Genome Sciences
The big picture
Biotechnology can be a volatile arena, with companies surging or plunging as their products try to pass approval hurdles and succeed in the market. But demand for biotechnology's goods 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 5 ETFs That Could Soar in 2012. And if you're looking for some great investments beyond ETFs, consider these 12 Dividend Stocks for 2012.