Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect materials companies to prosper as our global economy regains its footing and construction and infrastructure rebuilding projects get under way, the iShares Dow Jones US Basic Materials ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The iShares ETF's expense ratio -- its annual fee -- is a relatively low 0.47%.
This ETF has performed rather well, substantially outperforming the S&P 500, on average, over the past three, five, and 10 years. 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 very low turnover rate of 7%, 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. International Paper
Other companies didn't add as much to the ETF's returns last year, but could have an effect in the years to come. Freeport-McMoRan Copper & Gold
Aluminum giant Alcoa
The big picture
Demand for basic materials 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.