Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect small-cap companies to thrive over time, the Vanguard Small Cap Growth 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 0.12%. (Vanguard offerings typically sport exceedingly low fees.)
This ETF has performed rather well, beating the S&P 500 over the past five years, on average. But 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 34%, 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. Level 3 Communications
Other companies didn't add as much to the ETF's returns last year but could have an effect in the years to come. JDS Uniphase
The big picture
Great small caps tend to become great large caps, making many people rich along the way. 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.
Longtime Fool contributor Selena Maranjian owns shares of Netflix, but she holds no other position in any company mentioned. Check out his holdings and a short bio. The Fool owns shares of and has created a bull call spread position on Cisco Systems. Motley Fool newsletter services have recommended buying shares of Netflix, Cisco Systems, Nike, and Deckers Outdoor, as well as creating a diagonal call position in Nike and a bear put spread position in Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.