Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the pharmaceutical industry to thrive as our population grows, ages, and develops medical conditions, the PowerShares Dynamic Pharmaceuticals ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The PowerShares ETF's expense ratio -- its annual fee -- is a relatively low 0.63%, a bit higher than many ETFs but still far lower than most stock mutual funds.
This ETF has performed very well, beating the S&P 500 handily 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 low turnover rate of 9%, 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. Spectrum Pharmaceuticals
Other companies didn't add as much to the ETF's returns last year, but could have an effect in the years to come. Amgen gained just 4% over the past 12 months, and while some expect the stock's value to rise due to a share buyback, others would rather see the company invest that money in promising acquisitions, targeting a company such as Keryx Biopharmaceuticals
The big picture
Demand for medications 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.