Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the medical devices industry to thrive as the world's growing population ages, the iShares Dow Jones US Medical Devices
ETFs often sport lower expense ratios than their mutual fund cousins. The Medical Devices ETF's expense ratio -- its annual fee -- is a relatively low 0.47%.
This ETF has performed reasonably, but it's also very young, with just four years on the books. It underperformed its category in 2008 and 2010, though it beat it substantially in 2007 and 2009. 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 25%, 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. Sirona Dental Systems
Other companies didn't add much to the ETF's returns last year, but could have an effect in the years to come. Intuitive Surgical
The ETF holds about 40 different securities, and nearly 12% of its assets are in one company, Medtronic
The big picture
Demand for medical devices isn't going away anytime soon. 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."