Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the health-care industry to thrive as our population ages, the Vanguard Health Care (NYSE: VHT) 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 scores of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The Health Care ETF's expense ratio -- its annual fee -- is a low 0.24%.

This ETF has performed well, beating the S&P 500 handily over the past three and five years. As with most investments, though, 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 10%, 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. Pfizer (NYSE: PFE), for example, gained 39%, and it may be getting a big boost from its Prevnar 13 vaccine, which can fight pneumonia. Some are speculating that it will execute a spin-off to unlock some value. UnitedHealth Group (NYSE: UNH) gained 63% over the past year, partly thanks to investors' faith that it will benefit from health-care reform as millions more Americans end up insured. Abbott Labs (NYSE: ABT) is up 13% since this time last year, but anticipation is building around its Humira drug, which might receive approval for a seventh indication, fighting ulcerative colitis.

Other companies didn't add as much to the ETF's returns last year, but could have an effect in the years to come. Celgene (Nasdaq: CELG) and Medco Health (NYSE: MHS), for example, gained 10% and lost 9%, respectively. Celgene struggled against news that its main product, Remlivid, might be promoting secondary tumors in cancer patients -- but fellow Fool Brian Orelli felt the market overreacted to that. Pharmacy benefits manager Medco Health stands to benefit as blockbuster drugs' patents expire, since selling generic versions of those drugs will improve Medco's profit margins.

The big picture
Demand for health-care products and services 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 ."

Longtime Fool contributor Selena Maranjian holds no position in any company mentioned. Click here to see her holdings and a short bio. The Motley Fool owns shares of Abbott Labs, UnitedHealth Group, and MedcoHealth Solutions. Motley Fool newsletter services have recommended buying shares of MedcoHealth Solutions, Pfizer, UnitedHealth Group, and Abbott Labs, as well as creating a diagonal call position in UnitedHealth Group. 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.