Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect companies focusing on timber, paper, and packaging to thrive once the housing market starts to pick up, the iShares S&P Global Timber & Forestry ETF (Nasdaq: WOOD) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The iShares ETF's expense ratio -- its annual fee -- is a relatively low 0.48%.

This ETF has performed reasonably, but it's also very young, with just a few years on the books. It outperformed the S&P 500 in 2009 and 2010, but it's badly lagging the index so far 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 low turnover rate of 23%, 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. Timber REIT Rayonier (NYSE: RYN) advanced 30%, pays a growing dividend recently yielding around 3.8%, and boasts strong past and expected EPS growth. Plum Creek Timber (NYSE: PCL), up just 5%, sports a heftier dividend, but it has been growing more slowly.

Other companies didn't add as much to the ETF's returns last year, but could have an effect in the years to come. Weyerhaeuser (NYSE: WY) is up just 1% over the past year, but it has been growing its cash-king ratio, which recently topped that of competitors International Paper (NYSE: IP) and MeadWestvaco (NYSE: MWV). Still, the company's high debt worries some, while others are pleased to see it at least declining.

The big picture
Demand for lumber and paper 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.

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.

Longtime Fool contributor Selena Maranjian holds no position in any company mentioned. Click here to see her holdings and a short bio. The Fool owns shares of and has created a covered strangle position on Plum Creek Timber. 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.