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 as global wars, military operations, and air travel continue, the iShares Dow Jones US Aerospace & Defense (NYSE: ITA) 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.

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

This ETF has performed reasonably well, beating the market 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 14%, 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. Precision Castparts (NYSE: PCP) rose 32% over the past year. Its fans, who love its robust margins, expect its business to grow as the global economy recovers and the airline industry strengthens. Even more impressively, ceramic specialist and body armor maker Ceradyne (Nasdaq: CRDN) gained 113%, and its management expects that strong growth to continue. BE Aerospace (Nasdaq: BEAV), which makes cabin interiors for aircraft, advanced 36% in the past year, generating strong free cash flow.

Other companies didn't add quite as much to the ETF's returns last year, but could have a strong effect in the years to come. Boeing (NYSE: BA) gained 24% over the past year, and its bulls are pleased with a recent multibillion-dollar tanker contract, and with its potential to compete well on price against Lockheed Martin's (NYSE: LMT) F-35 fighter.

The big picture
Demand for aerospace and defense 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 ."