Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the financial sector to recover and be a solid grower over the coming years, as our growing population will doubtlessly continue to need financial services, the iShares Dow Jones U.S. Financial Sector ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The iShares ETF's expense ratio -- its annual fee -- is a relatively low 0.47%.
This ETF has not been the most spectacular long-term performer, partly due to the sector's meltdown during the credit crisis a few years back. On average it has underperformed the S&P 500 over the past five- and 10-year periods, but as the sector is recovering, it has outperformed the S&P 500 so far this year. 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 very low turnover rate of 8%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
Several financial companies posted positive results over the past year. BB&T
Other companies didn't do as well last year, but they could see their fortunes change in years to come. Bank of America
The big picture
Demand for financial 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.