Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect a rising global population to drive greater demand for food, the Market Vectors Agribusiness ETF
ETFs often sport lower expense ratios than their mutual fund cousins. At 0.56%, the Agribusiness ETF's expense ratio -- its annual fee -- isn't the lowest in the business, but it's still less than what a lot of mutual funds charge.
This ETF has performed reasonably well, but it's also very young, with just three full years on the books. It underperformed the market in 2008, and beat it substantially in 2009 and 2010. 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 20%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
Several of this ETF's 46 components made strong contributions to its performance over the past year. Chemical & Mining Co. of Chile
Other companies didn't add as much to the ETF's returns over the past year, but could have a positive effect in the years to come. Monsanto
The big picture
Demand for agricultural products 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.
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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."
Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article. Motley Fool Options has recommended a synthetic long position on Monsanto. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.