Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some health-care stocks to your portfolio but don't have the time or expertise to hand-pick a few, the Health Care Select Sector SPDR ETF (NYSEMKT:XLV) could save you a lot of trouble. Instead of trying to figure out which stocks 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. This ETF, focused on health-care stocks, sports a very low expense ratio -- an annual fee -- of 0.16%.

This health-care stocks ETF has outperformed the world market over the past five, 10, and 15 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.

Why health-care stocks?
For starters, our planet's growing and aging population will keep demand rising for health-care products and services. On top of that, Obamacare is ushering more Americans into health coverage, delivering more consumers to companies treating them – and thus boosting the prospects for many health-care stocks.

More than a handful of health-care stocks had strong performances over the past year. Regeneron Pharmaceuticals, (NASDAQ:REGN), for example, surged 91%, partly on the success of its wet age-related macular degeneration drug, Eylea (which may soon gain FDA approval to treat diabetic macular edema, too). Eylea generated close to $2 billion in sales last year. Regeneron has lots of irons in the fire, including treatments for high cholesterol and rheumatoid arthritis, which it's developing in partnership with Sanofi. (The FDA has recently expressed concerns about the cholesterol-lowering drug.)

Gilead Sciences (NASDAQ:GILD) popped 70%, with investors excited about its recently approved oral hepatitis-C treatment, Sovaldi, with its reported cure rates near 90% in clinical trials. Insurers and medical bigwigs are less excited, though, objecting to its very steep price tag of around $84,000 for a 12-week course. The company's fourth quarter was strong, with revenue up 21% on strong new-product sales. Sovaldi has the potential to become a blockbuster , with sales exceeding $1 billion. Meanwhile, Sales of Gilead's HIV drug Stribild are growing rapidly, and it might achieve blockbuster status this year, too.

Celgene Corporation (NASDAQ:CELG), another biotech concern, is on a roll, thanks in part to its anemia drug, Revlimid, which now contributes 65% of revenue. It's not ideal to depend on one product so much, but as my colleague Stephen Simpson has noted, Celgene has "a deep early stage pipeline of oncology drugs" and "meaningful label expansion opportunities for approved drugs." It appears to be undervalued, too, with its forward P/E ratio near 17 and EPS growth expected between about 20% and 30% over the next few years.

Other health-care stocks didn't do quite as well over the past year, but could see their fortunes change in the coming years. Allergan (NYSE:AGN), for example, only grew 17%, but it has been beating the S&P 500 lately. It's perhaps best known for its Botox formula, but many don't realize that Botox is also approved to treat conditions other than normal aging, such as migraine headaches and overactive bladders. Some worry about patent expiration for its dry-eye treatment Restasis, but bulls like its strong balance sheet and free cash flow, which could help it acquire smaller companies and their drugs. It's also expected to grow its earnings by double digits in the coming years.

The big picture
If you're interested in adding some health-care stocks to your portfolio, consider doing so via an ETF. 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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Selena Maranjian, whom you can follow on Twitter, owns shares of Celgene, Gilead Sciences, and Regeneron Pharmaceuticals. The Motley Fool recommends Celgene and Gilead Sciences. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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