Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some media companies to your portfolio but don't have the time or expertise to hand-pick a few, the PowerShares Dynamic Media ETF (PBS -1.50%) could save you a lot of trouble. Instead of trying to figure out which stocks will perform best, you can use this exchange-traded fund to invest in lots of media companies simultaneously.

Why this ETF, and why media companies?
The media industry doesn't just mean your nightly TV news or your local newspaper -- two media channels that have been challenged in recent years by the growth of the Internet and cable TV. It includes a wide variety of entertainment and information, ranging from movies to websites. Our need for information and our desire for entertainment aren't likely to go away, supporting long-term demand, and this ETF can help your portfolio capitalize on that. It has trounced the world market over the past three and five years.

ETFs often sport lower expense ratios than their mutual fund cousins. This ETF is no exception, with an annual fee of 0.63%. It's fairly small, though, 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.

A closer look at some components
On your own you might not have selected Lions Gate Entertainment Corp. (LGF-A -0.78%) or WebMD Health Corp. (WBMD) as media companies for your portfolio, but this ETF included them among its 30 holdings.

Lions Gate Entertainment
Lions Gate Entertainment has averaged stock price growth of 14.6% annually over the past decade and nearly 40% over the past five years, but it's down almost 6% over the past year. Why? Well, its last earnings report was disappointing, with revenue and earnings coming in below year-ago levels, in part due to some poor box-office results -- entertainment is a fickle business. But Lions Gate's future seems quite promising, with its Hunger Games franchise still churning out movies and its newer Divergent film (the first installment in a trilogy) doing well. It has other valuable movie and TV franchises and properties, too, such as Twilight, Mad Men, Orange Is the New Black, and more.

One of the company's advantages is also a drawback: its size. With a market cap near $4 billion, it's far smaller than other major media companies, which are relatively stable and have deeper pockets. However, Lions Gate can grow more rapidly, and each blockbuster can have a more meaningful impact on its bottom line. The company is aiming to broaden its scope, too, moving into video gaming. That's a huge and growing market, totaling $21 billion in the U.S. last year.

There's a lot to like about Lions Gate, including its savvy management. For example, it has sold international rights to some of its offerings early, thus reducing its production risk and limiting potential losses. Its recent pullback seems a promising opportunity. Just keep an eye on the success of its releases -- and watch its share count, too, which has been inching up, threatening to shrink earnings per share.

WebMD Health
The online health information provider WebMD has offered shareholders an annual average growth rate of 11% over the past five years. Some promising observations from its financial statements are that WebMD is free-cash-flow positive, its net margin is rising after a recent drop, and its share count is shrinking, which can boost EPS. Its top and bottom lines are also trending upward after a decline a few years ago.

There are believers on Wall Street, too: Analysts at Stifel recently upgraded the stock from hold to buy due to higher expectations of advertising revenue growth. The company's Healthy Target app is a smart move, taking advantage of the fast-growing mobile market, but it's not without significant competition, such as Apple's HealthKit, which can be paired with the company's wearable hardware, such as an iWatch. In its last quarter, WebMD's revenue surged 19% year over year, traffic grew by double digits, and a net loss became a net gain.

There are doubters aplenty, too, with some 20% of WebMD's stock float sold short as of late May. The company is in the midst of a solid turnaround, but aside from a solid library of content, it doesn't have the strongest sustainable competitive edge.

The big picture
It makes sense to consider adding some media companies to your portfolio. You can do so easily via the PowerShares Dynamic Media ETF.