Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you regard solar power as a growing and inevitably important energy source in the future, the Guggenheim Solar (NYSE: TAN) ETF 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 many of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The Guggenheim Solar ETF's expense ratio is no exception. Its annual fee of 0.65%, while higher than that of many ETFs, remains well below the typical mutual fund rate.

This ETF doesn't have a strong long-term track record, but that's because it's relatively young. It gained less than the overall market in 2009, and lost 28% in 2010. It's up about 18% so far this year. As with most investments, 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 17%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.

What's in it?
Several of this ETF's components made strong contributions to its performance over the past year. Power-One (Nasdaq: PWER) and LDK Solar (NYSE: LDK) have both more than doubled over that time frame. Power-One is expanding beyond Europe with new plants in the U.S. and China, and taking market share from competitors. China-based LDK has been boosting its capacity via inexpensive debt, while completing more production in-house. Fellow component JA Solar Holdings (Nasdaq: JASO) has steadily received new orders for higher-margin offerings; it's up more than 60% in the past year.

Other companies didn't add much to the ETF's returns last year, but they could have an effect in the years to come. SunPower (Nasdaq: SPWRA), for example, lost 7% over the past year, but stands to benefit from a heightened focus on solar energy in California, thanks to its operations in the West. SunTech Power (NYSE: STP), down 23% since a year ago, is also well-positioned, with a big new project in Arizona.

The ETF holds 34 different securities, with a huge 21% chunk in low-cost industry leader First Solar (Nasdaq: FSLR). That company has recently been expanding its operations in China and Canada.

The big picture
A well-chosen ETF can grant you instant diversification across the industry -- and make investing in and profiting from the sector that much easier.

ETFs can help you find the way to better investing results. To find some great ETF investing ideas, take a look at The Motley Fool's special free report, " 3 ETFs Set to Soar During the Recovery ."