Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you consider many information technology companies undervalued, and you expect the industry to thrive as global demand for its ever-changing services grows, the Vanguard Information Technology ETF
The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The Vanguard ETF's expense ratio -- its annual fee -- is a low 0.24%.
This ETF has performed well, beating the S&P 500 over the past three and five years, on average. 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 9%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
Several of this ETF's components made strong contributions to its performance over the past year. Qualcomm
Other companies didn't add as much to the ETF's returns last year, but could have an effect in the years to come. Corning
Meanwhile, Cisco Systems
The big picture
Demand for information technology isn't going away anytime soon. A well-chosen ETF can grant you instant diversification across the industry -- and make investing in and profiting from the sector that much easier.
ETFs can help you find the way to better investing results. To find some great ETF investing ideas, take a look at The Motley Fool's special free report, " 3 ETFs Set to Soar During the Recovery ."