Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect regional banks to do well because of persistent low interest rates and their generally more conservative lending nature, the SPDR KBW Regional Banking ETF (NYSE: KRE) 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 lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The bank ETF's expense ratio -- its annual fee -- is a relatively low 0.35%.

Obviously, the banking swoon has made this ETF perform pretty badly over the past five years, with an average annual loss of 13.7%. 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 13%, 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. Pinnacle Financial Partners (Nasdaq: PNFP), for example, gained about 20% over the past year, serving customers in Tennessee. Part of its run-up was likely tied to speculation that the bank would be acquired. That has happened to many regional banks, as big banks maintain their "too big to fail" status. Indeed, according to former finance professor and Federal Reserve economist Jack Guttentag, three-fifths of the home mortgage market belongs to just four big banks -- Wells Fargo (NYSE: WFC), Citigroup (NYSE: C), Bank of America, and JPMorgan Chase (NYSE: JPM).

Other companies have held back the ETF's returns in the past year, but could have a more positive effect in the years to come. Associated Banc-Corp (Nasdaq: ASBC), which mainly serves Wisconsin, Illinois, and Minnesota, shed about 19% of its value. In recent months, its insiders have been doing more buying than selling, which is auspicious, but the bank is still working off some bad loans and has not yet paid back all of its Troubled Asset Relief Program bailout money.

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 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 ."