Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the coal industry to thrive as our world keeps demanding more energy and new cleaner-coal technologies are developed, the Market Vectors Coal ETF
ETFs often sport lower expense ratios than their mutual fund cousins. This coal ETF's expense ratio -- its annual fee -- is a reasonable 0.59%, which is higher than many ETFs, but far lower than the typical stock mutual fund.
This ETF has performed very well, but it's also very young, with just a few years on the books. It blew the S&P 500 away in 2009 and 2010, but it's lagging sharply behind so far this year with a big loss. 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 relatively low turnover rate of 29%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
Few of this ETF's components made strong contributions to its performance in 2011. Joy Global
Other companies added to the ETF's losses this year, but could have a more positive effect in the years to come. Patriot Coal
The big picture
Demand for coal 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.
Longtime Fool contributor Selena Maranjian holds no position in any company mentioned. Click here to see her holdings and a short bio. The Motley Fool owns shares of Joy Global and Freeport-McMoRan Copper & Gold. Motley Fool newsletter services have recommended buying shares of Walter Energy. 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.