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Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some hefty companies to your portfolio, the PowerShares QQQ ETF (NASDAQ: QQQ ) 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.
ETFs often sport lower expense ratios than their mutual fund cousins. The PowerShares ETF's expense ratio -- its annual fee -- is a very low 0.20%. This ETF has performed well, beating the S&P 500 handily over the past three, five, and 10 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.
Why large companies?
Large companies can add some ballast to your collection. Many may not grow as briskly as their smaller counterparts, but in order to reach their current size, they likely have some strong assets and features. And some can grow quite briskly, too.
More than a handful of companies had solid performances over the past year. Qualcomm (NASDAQ: QCOM ) , for example, gained 15%. It's supplying many millions of iDevices and Android devices with its LTE chip technology and boasts robust market share. Qualcomm has been broadening its line of S4 Snapdragon processors for smartphones, and it has surpassed chip giant Intel (NASDAQ: INTC ) in market capitalization as the two jockey for dominance in chips (for which 2013 expectations have been pared back).
Mondelez International (NASDAQ: MDLZ ) , which spun off from Kraft (NASDAQ: KRFT.DL ) to focus on the international arena, gained 5%. It's able to grow faster than its North American counterpart, as many foreign economies are developing and more dynamic than the established first world. Analysts at Canaccord Genuity slapped a sell rating on the company a few months ago, though, while favoring Kraft. That had our own analysts scratching their heads, thinking it must be due to Mondelez's debt. CEO Irene Rosenfeld recently received $10 million in stock grants, but they're very tied to business performance.
Other companies didn't do as well last year, but could see their fortunes change in the coming years. Chinese search-engine giant Baidu (NASDAQ: BIDU ) is down about 14% over the past year, hurt in part by China's slowing growth rate. Baidu itself isn't growing too slowly, though, with revenue and earnings sporting five-year average annual growth rates of more than 60%. And much of China and Asia has yet to get online, representing huge growth potential. But Baidu has serious competition, such as from Qihoo 360 Technology (NYSE: QIHU ) , for example -- though even if its slice of the pie shrinks, remember that the pie is growing. Meanwhile, a forward P/E of only about 18 makes it well worth consideration.
U.K.-based telecom giant Vodafone (NASDAQ: VOD ) dropped 5%. It has bulls excited about the projected growth of 4G technology and the company's "Smart II" low-cost, mass-market smartphone. They also like its 45% interest in Verizon Wireless that has generated billions in cash and its entry into the promising mobile payments market. On the other hand, it offers considerable uncertainty and doesn't appear to be bargain-priced.
The big picture
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.
Regardless of your short-term view on the Chinese economy, there seems to be lots of opportunity in Baidu. Our brand-new premium report breaks down the dominant Chinese search provider's strengths and weaknesses. Just click here to access it now.