Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the aerospace and defense industry to thrive, given the strife and upheaval around the world, the iShares Dow Jones US Aerospace & Defense ETF (NYSE: ITA) 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 several dozen 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 0.47%.

This ETF is only a few years old, so it doesn't have much of a track record yet. So far, it has generally posted returns slightly better than the overall market. 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 14%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do. (It tracks the benchmark Dow Jones U.S. Select Aerospace & Defense Index.) 

What's in it?

Several of this ETF's components made strong contributions to its performance over the past year. Textron (NYSE: TXT), for example, is up about 35%, and investors expect further growth; sales have started picking up in its helicopter, military hardware, and industrial divisions, and a turnaround could soon take effect in its Cessna business-jet line. Ballistic armor specialist Ceradyne (Nasdaq: CRDN) advanced 68%, with its bulls excited about its recent big order from the U.S. Army and its plans to buy specialty glass maker VIOX.

Other companies didn't add much to the ETF's returns last year, but they could have an effect in the years to come. L-3 Communications (NYSE: LLL) lost about 12% over the past year, but it has been increasing its return on capital, and it makes versatile products that can be used in a number of different applications.

The ETF holds 32 different securities, with its top two, United Technologies (NYSE: UTX) and Boeing (NYSE: BA), representing nearly 17% of its assets. They're two of the biggest players in the business, and while many have grown frustrated with how slowly Boeing has brought its new Dreamliner to market, some excitement has built up over United Technologies' possible expansion into making planes of its own. The news isn't all bad for Boeing, either -- it just won a huge new U.S. Air Force contract.

The big picture
Demand for defense and aerospace offerings 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."