Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the American homebuilding industry to take off eventually, then the Dow Jones U.S. Home Construction Index Fund ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The construction ETF's expense ratio -- its annual fee -- is a relatively low 0.47%.
This ETF doesn't sport the most attractive performance record, but that's not surprising, given the state of the U.S. housing market during the relatively short life of the fund. It underperformed the S&P 500, on average, 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 22%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
Several home-construction-related companies had strong performances over the past year. Paint giant Sherwin-Williams
Like other companies in this arena, Lowe's
Other companies didn't do as well last year, but could see their fortunes change in the coming years. Gypsum and wallboard concern USG
The big picture
Demand for new homes in the U.S. will eventually pick up, once the oversupply that built up in recent years is worked through. 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.