Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect medical devices companies to thrive as our population ages and needs products and procedures such as stents and pacemakers, the iShares Dow Jones US Medical Devices ETF
ETFs often sport lower expense ratios than their mutual fund cousins. This medical devices ETF's expense ratio -- its annual fee -- is a relatively low 0.47%.
This ETF has performed reasonably well, outperforming the S&P 500 over the past five 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 not-astronomical turnover rate of 33%, 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. MAKO Surgical
Defibrillator maker ZOLL Medical
Other companies didn't add as much to the ETF's returns this year, but could have an effect in the years to come. Varian Medical Systems
The big picture
Medical device makers face a bit of headwind in the form of excise taxes instituted by our recent health-care reform legislation. But demand for medical devices 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.