Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the transportation industry to thrive as the world's economy gets back on track, the iShares Dow Jones Transportation Average (NYSE: IYT) 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 several dozen of them simultaneously.

You won't be alone in your interest in transportation. Berkshire Hathaway's (NYSE: BRK-B) Warren Buffett admires the railroad business so much that he bought an entire railroad recently. Along with boosting Berkshire's after-tax earning power by 30% in 2010, owning Burlington Northern puts his finger on the pulse of the economy. During healthy times, companies are busy shipping items across the country.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The Transportation ETF's expense ratio -- its annual fee -- is a relatively low 0.47%.

This ETF has performed reasonably well, outpacing the S&P 500 over the past three and five years. 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 12%, 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. CSX (NYSE: CSX) and Union Pacific (NYSE: UNP) advanced 53% and 36%, respectively, over the past 12 months. Economic bellwether United Parcel Service (NYSE: UPS) gained 19%, delivering a solid dividend, as well.

Other holdings didn't exactly shine last year, with American Airlines parent AMR (NYSE: AMR) falling 28% and Delta dropping 33%. These companies could have a more positive effect on the ETF's performance in the years to come, but that's always uncertain, especially given the perpetual challenges of the airline business. (Fortunately, the ETF's airline holdings are far smaller than its railroad and delivery ones.) That said, United Continental Holdings (NYSE: UAL) bucked the trend among airlines, gaining 18% over the past year.

The big picture
Demand for transportation won't go 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.

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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 ."