Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect small companies to do well in coming years as the global economy recovers, partly because they have so much room for growth due to their size, the iShares S&P SmallCap 600 Index ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The iShares ETF's expense ratio -- its annual fee -- is a very low 0.20%.
This ETF has performed rather well, beating the S&P 500 over the past three, five, and 10 years, on average. 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 21%, 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. Regeneron Pharmaceuticals
World Fuel Services
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. Piedmont Natural Gas, up just 13%, has been reporting solid operational results, but revenue slipped lately.
The big picture
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.