Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some semiconductor stocks to your portfolio, the SPDR S&P Semiconductor ETF (NYSEMKT:XSD) 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 semiconductor ETF's expense ratio -- its annual fee -- is a low 0.35 %. The fund is fairly small, too, 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.

This ETF has not performed  well so far, lagging the world market over the past three and five years. But these have been tough economic times. 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 semiconductors?
Technology has become a nearly inextricable part of our lives, with many more things than we might ever expect run with semiconductors. The industry is rather cyclical, too, and is thus poised to do well in the coming years as our global economies recover.

Some semiconductor companies  had relatively strong performances over the past year. specialized storage and networking semiconductor outfit LSI (NYSE: LSI) gained 8%, for example, as it expands  into flash storage. Short interest in the company has been rising, because of sluggish market conditions, but as demand for storage inevitably grows, its future seems promising. Its recent quarterly earnings were below  some expectations, but revenue was still up a solid 14%.

Other companies didn't do as well last year but could see their fortunes change in the coming years. Micron Technology (NASDAQ: MU) shed 3% but has bought a troubled rival that supplies iDevices and appears undervalued. Bears worry about share dilution and net losses.

Broadcom (NASDAQ: BRCM) and TriQuint Semiconductor (NASDAQ:TQNT) both shed 12%. Broadcom is making some smart acquisitions that can boost its presence in mobile computing, while going after the Chinese smartphone market as well. Like Qualcomm (NASDAQ:QCOM) and Corning (NYSE:GLW), its products are also found in many iDevices, which should fatten its coffers. It's inside Amazon.com's Kindles and other devices, as well. Some see the stock as a bargain, while others worry about its growth prospects and competition.

TriQuint's main attractive feature at the moment is its position as a supplier to Apple (NASDAQ:AAPL). The huge sales volume for the new iPhone 5 bodes well for TriQuint, but its recent earnings report was disappointing. Bears worry about competition -- from the likes of Skyworks Solutions (NASDAQ: SWKS) -- and they also don't like that so much of TriQuint's fortune rests with one customer. Bolstering the company's performance are its less-focused-on networking and defense operations. Another auspicious bit of news is its CEO buying $100,000 worth of stock.

The big picture
Long-term demand for semiconductors 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.

Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of Apple, Corning, and Qualcomm.The Motley Fool owns shares of Apple, Amazon.com, Corning, Qualcomm, and TriQuint Semiconductor. Motley Fool newsletter services recommend Apple, Amazon.com, and Corning. 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.