Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the energy industry to thrive as our global demand for power continues to grow, the Vanguard Energy ETF (NYSE: VDE) 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 energy ETF's expense ratio -- its annual fee -- is a very low 0.19%.

This ETF has performed rather well, beating 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 low turnover rate of 11%, 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. Natural gas specialist Spectra Energy (NYSE: SE) gained 27% over the past year, with investors likely impressed by its big revenue and earnings gains. Over the past year, revenue rose 9%, and earnings 28%. The company recently announced plans to spend $500 million expanding its pipeline shipping capacity to handle rising shale gas volumes.

Other companies didn't add as much to the ETF's returns last year, but could have an effect in the years to come. Chesapeake Energy (NYSE: CHK), for example, shed 9%. It's the nation's largest natural gas producer, with promising Texas oil fields, among other assets. Still, it has deservedly earned many investors' scorn for its lavish executive compensation and shareholder-unfriendliness

Marathon Petroleum (NYSE: MPC) has shed about 14% since its first day of trading after splitting off from Marathon Oil. Now a major refiner, Marathon Petroleum has been expanding its capacity and can also get more sweet crude processing work from various shale projects. (My colleague Dan Caplinger sees it as one of eight stocks that have it all.)

Halliburton (NYSE: HAL), down about 8%, is expected to benefit from rising oil prices and continued global drilling activities that will require its services. It still faces uncertain outcomes, though, from its role in the big Gulf oil spill.

The big picture
Demand for energy 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 owns shares of Chesapeake Energy, but she holds no other position in any company mentioned. Click here to see her holdings and a short bio. The Motley Fool owns shares of Vanguard Energy ETF. Motley Fool newsletter services have recommended buying shares of Chesapeake Energy and Spectra 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.