Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the utilities industry to thrive due to our growing population and the non-discretionary nature of energy usage, the First Trust Utilities AlphaDEX ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The utility ETF's expense ratio -- its annual fee -- is 0.70%. That's not as high as many active funds, but it's fairly high for an ETF.
This ETF has performed reasonably, but it's also very young, with just three full years on the books. Its three-year average return topped the S&P 500 handily, but 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 turnover rate of 60%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do, though its turnover isn't exactly low.
What's in it?
Several of this ETF's components made strong contributions to its performance over the past year. Natural gas specialist Southern Union
Other companies didn't add quite as much to the ETF's returns last year, but they could have an effect in the years to come. CenturyLink
The big picture
Demand for utilities 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 hereto see her holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Exelon. Motley Fool newsletter services have recommended creating a covered strangle position in Exelon. 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.