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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 socially responsible stocks to your portfolio, the iShares MSCI Select Socially Responsible ETF (NYSEMKT: KLD  ) 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 iShares ETF's expense ratio -- its annual fee -- is a relatively low 0.50%. The fund is on the small side, 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 underperformed the S&P 500 over the past three and five years, though it's handily topping it so far this year. 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 socially responsible?
More than a handful of socially responsible companies had strong performances over the past year. Eaton (NYSE: ETN  ) surged 29%, with the power management company shifting its focus from international projects to more U.S.-based ones. Management recently projected revenue growth of 42% in 2013 and that operating earnings will set a record. Eaton has also started seeing its inventories of heavy equipment start to shrink, which is promising. Goldman Sachs recently recommended the stock, but Fool contributor Rich Smith would steer clear, due to Eaton's debt and valuation. Among many environmental initiatives, the company has reduced its greenhouse gas emissions by 26% since 2006.

Procter & Gamble (NYSE: PG  ) gained 19%. The company has been struggling in recent years that featured anemic revenue growth and, until this past year, shrinking earnings. Its strong second quarter was in large part due to cost-cutting, with promises of innovation-driven growth ahead. Among many socially responsible initiatives, it has been cutting its energy and water use and reducing its waste output as well -- in all cases by double-digit percentage rates over the past few years.

Aerospace and defense electronics specialist Rockwell Collins (NYSE: COL  ) advanced 12%, recently hitting a 52-week high. Due to possible and actual cutbacks in military spending, the company has been shifting more of its attention to the commercial arena and has shrunk its workforce some, too, due to sequestration effects. The company has laid out its sustainability goals, such as a 15% reduction in greenhouse gases and issues regular reports on its progress.

Other companies didn't do as well last year, but could see their fortunes change in the coming years. Natural gas specialist Spectra Energy (NYSE: SE  ) gained 2%, for example. The company has been inking some promising partnerships, and recently yielded 4.1%. Times have been tough lately, with low natural gas prices, an oversupply, and few rigs, but as those factors turn around, so should Spectra's fortunes. It, too, publishes its environmental goals and progress.

The big picture
Interest in companies working to be socially responsible 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.

To learn more about a few ETFs that have great promise for delivering profits to shareholders in a recovering global economy, check out The Motley Fool's special free report "3 ETFs Set to Soar During the Recovery." Just click here to access it now.

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8/30/2016 1:02 PM
COL $84.47 Down -0.19 -0.22%
Rockwell Collins CAPS Rating: ****
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Eaton CAPS Rating: ****
KLD $91.36 Down -0.31 -0.34%
iShares KLD Select… CAPS Rating: No stars
PG $87.69 Down -0.61 -0.69%
Procter and Gamble CAPS Rating: ****
SE $35.81 Up +0.08 +0.22%
Spectra Energy CAPS Rating: *****