Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the food and drink industry to thrive as our global population keeps growing and human survival continues to require solids and liquids, the PowerShares Dynamic Food & Beverage ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The PowerShares ETF's expense ratio -- its annual fee -- is 0.63%. (It's also on the small side, with about $210 million in assets, so proceed with a little caution.)
This ETF has performed rather well, beating the S&P 500 (INDEX: ^GSPC) over the past three and five years, on average. It trounced the S&P 500 in 2010, and is ahead of it again this year. 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 turnover rate of 73%, this fund actually trades fairly frequently, compared to many ETFs.
What's in it?
Several of this ETF's components made strong contributions to its performance over the past year. Green Mountain Coffee Roasters
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. McDonald's
The big picture
Demand for food and drinks isn't going away anytime soon. 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 McDonald's and Starbucks, but she holds no other position in any company mentioned. Click here to see her holdings and a short bio. The Motley Fool owns shares of Whole Foods and Starbucks. Motley Fool newsletter services have recommended buying shares of Green Mountain Coffee Roasters, Starbucks, McDonald's, and Whole Foods, as well as creating a lurking gator position in Green Mountain Coffee Roasters. 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.