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
The basics
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
Deckers Outdoor
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.
Learn about the best dividend ETFs. And if you're looking for some great investments beyond ETFs, consider these 10 Stocks for Your Retirement Portfolio.