Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the natural resources industry to thrive as the global economy picks up, the iShares S&P North American Natural Resources
The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The Natural Resources ETF's expense ratio -- its annual fee -- is 0.48%, which is low compared to mutual funds, although not all that low for an ETF. It recently sported a 1.4% dividend yield, as well.
This ETF has performed reasonably well, beating the S&P 500 handily over the past one and five years, though losing to it over the past three. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver. With an extremely low turnover rate of 7%, 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. Freeport McMoRan Copper & Gold
Other companies didn't add as much to the Natural Resources ETF's returns last year, but could have an effect in the years to come. Cenovus Energy
The big picture
Demand for natural resources, especially oil, 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 ."