Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the U.S. mortgage REIT industry to prosper over time, the iShares FTSE NAREIT Mortgage Plus Capped Index Fund ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The iShares ETF's expense ratio -- its annual fee -- is a relatively low 0.48%. It also sports a tantalizing 12% dividend yield.
This ETF has not been an outstanding performer, but it's also very young, with just a few years on the books. It underperformed the S&P 500, on average, over the past three 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.
What's in it?
Several mortgage REITs had strong performance over the past year. Annaly Capital
Some rationalize that even if these hefty yields are cut in half, they'll be appealing, but others point out that even with massive dividends, many of these companies have lost value for shareholders. It can pay to focus on the most healthy yields you can find -- or to diversify some of your risk via an ETF.
Other companies didn't do as well last year, but could have an effect in the years to come. Chimera Investment
The big picture
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.