Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the auto industry to thrive over time as our growing global population demands wheels, and especially as we work our way out of our recent economic slowdown, the First Trust Nasdaq Global Auto Index ETF (Nasdaq: CARZ) 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 First Trust ETF's expense ratio -- its annual fee -- is 0.70%. The fund is very small, too, so if you're thinking of buying, beware of occasionally large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.

This ETF is too new to have a sufficient track record to assess. It's the future that matters most, though, and what you expect from the industry. 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 16%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.

What's in it?
More than a handful of automotive companies had strong performances over the past year. Harley-Davidson (NYSE: HOG) surged 25% and still looks attractive to some, with a P/E ratio of 15, roughly half its five-year average, and a forward P/E of 12. Its revenue growth has sputtered in recent years, while earnings dipped and have been rebounding. The company's products are very discretionary items, and as our economy improves, demand for them should grow.

Electric-car maker Tesla (Nasdaq: TSLA) jumped 20% over the year, but that includes getting whacked recently upon lowering its expectations  for the year. One factor holding back electric-car sales is the relative paucity of charging stations. Tesla recently announced plans to open solar-powered stations, though bears are skeptical about that. Meanwhile, the company has been taking on debt and issuing more shares.

General Motors (NYSE: GM) advanced 14%, while Ford Motor (NYSE: F) gained 5%. Both companies have been turning themselves around, with Ford being more impressive so far. General Motors' last year was the most profitable one ever, and its new offerings have been well received, but competition remains tough, weakness in Europe is hurting it, and it's losing market share in the U.S.

Ford, meanwhile, has streamlined its offerings globally and has posted a dozen profitable quarters, while boosting its vehicles' quality. Its efforts to simplify production should lead to bigger profit margins and improved vehicles.

The big picture
Demand for automobiles 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.

For more on Ford, be sure to check out this special premium report on Ford and its prospects compiled by the Fool's analysts. Click here to get your copy today, plus a year of free updates.