Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you respect the power of dividends, the Vanguard Dividend Appreciation ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The Vanguard ETF's expense ratio -- its annual fee -- is a very low 0.18%. Its dividend yield was recently 2.1%.
This ETF has performed reasonably well, beating the S&P 500 over the past three and five years, on average. 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 a low turnover rate of 15%, 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. Caterpillar
Other companies didn't add quite as much to the ETF's returns last year, but could have an effect in the years to come. United Technologies
The big picture
A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.
ETFs can help you find the way to better investing results. To discover great ETF investing ideas, take a look at The Motley Fool's special free report, " 3 ETFs Set to Soar During the Recovery ."