Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the timber industry to prosper over time as our planet's population continues to grow and build, and you like the prospects for paper, as well, the Guggenheim Timber ETF
The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The timber ETF's expense ratio -- its annual fee -- is 0.70%, which is a bit higher than many ETFs, but also considerably lower than the typical stock mutual fund.
This ETF has performed reasonably, but it's also very young, with just a few years on the books. It outperformed the S&P 500, on average, over the past three years, but is underperforming it so far in 2012. 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 29%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
Several timber and paper stocks have had strong performance over the past year. Rayonier
International Paper
Other companies didn't do as well last year, but could have an effect in the years to come. Weyerhaueser
The big picture
Demand for timber, pulp, paper, and more 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 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.