Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the networking industry to thrive over time as our demand for communication services keeps increasing, the iShares S&P North American Technology-Multimedia Networking Index Fund ETF (NYSE: IGN) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The iShares ETF's expense ratio -- its annual fee -- is a relatively low 0.48%. The fund is fairly small, too, so if you're thinking of buying, beware of possibly large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.

This ETF has a mixed performance record, slightly outperforming the world market over the past decade, but underperforming it over the past three and five years. 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 28%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.

What's in it?
Several networking companies had strong performances over the past year. Brocade Communications (Nasdaq: BRCD), up 66%, has been outperforming analyst estimates and buying back shares. Its CEO is preparing to leave, and some wonder whether the company will be bought out by another. Investors are hoping that some kind of change will help the Ethernet company's top line grow, as its growth rate has been shrinking in recent years.

Motorola Solutions (NYSE: MSI) gained 26%. In its last quarter, it reported government sales of $1.5 billion, up 14%, overall revenue up 8%, and EPS from continuing operations more than quadrupling. Still, overall revenue growth for 2012 is expected to only be around 5% or 6%.

Other companies didn't do as well last year, but they could see their fortunes change in the coming years. Infrastructure supplier Riverbed Technology (Nasdaq: RVBD) gained just 2%, pressured in part by Europe's woes and an overall sluggishness in demand, but it's poised to profit from the growth in cloud computing. Some like its partnership with Juniper, but others still don't see it as strongest in its field.

InterDigital (Nasdaq: IDCC) shares sank by nearly half over the past year, posting disappointing earnings and also disappointing some by not being acquired. It has planned to sell off patents, and recently won a case against Nokia. Some are skeptical of the patent-oriented business model, but there may be several billion dollars of value there. The company recently sold 1,700 of its 3G and 4G LTE wireless patents for $375 million. 

The big picture
Demand for networking products and 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.

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