Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect companies with fat patent portfolios representing a lot of proprietary intellectual property to prosper over the long term, the Guggenheim Ocean Tomo Patent ETF
Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.
ETFs often sport lower expense ratios than their mutual fund cousins. The patent ETF's expense ratio -- its annual fee -- is 0.6%, which is a bit higher than many ETFs, but also considerably lower than most stock mutual funds.
This ETF has performed reasonably, but it's also very young, with just a few years on the books. It beat the S&P 500 in 2007, 2008, and 2009, but has lagged it over the past year and a half. 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. Note that, due in part to its youth, this ETF is rather tiny, with total assets of close to $10 million. If that's a deal-breaker for you, consider simply adding it to your watchlist.
With a low turnover rate of 14%, 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. Storage giant EMC
Other companies didn't add as much to the ETF's returns last year, but could have an effect in the years to come. General Electric
The big picture
Demand for technology and innovation 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 Qualcomm and 3M, 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 EMC and Qualcomm. Motley Fool newsletter services have recommended buying shares of VMware and 3M. 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.