Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the semiconductor industry to thrive as consumers businesses continue to embrace and demand new electronic goods, the SPDR S&P Semiconductor ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The semiconductor ETF's expense ratio -- its annual fee -- is a relatively low 0.35%.
This ETF has performed reasonably well, crushing the S&P 500 over the past three years but modestly underperforming it since 2006, 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.
What's in it?
Several of this ETF's components have made strong contributions to its performance so far in 2011. NetLogic is up 57% so far for the year.
Other companies haven't added as much to the ETF's returns this year but could have an effect in the years to come. Audio-chip specialist Cirrus Logic
Home-networking chipmaker Entropic Communications
Licensing concern Rambus
The big picture
Demand for semiconductors 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.