Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the utility industry to thrive as our growing population continues to demand energy, the PowerShares Dynamic Utilities 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 0.60%. It's relatively small, too, so if you're thinking of buying, beware of occasionally large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.
This ETF hasn't turned in the best performance yet in its young life. It has underperformed the S&P 500 over the past three years, and roughly matched it over the past five. 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 of the utilities that this ETF tracks made strong contributions to its performance over the past year. Duke Energy
But the ETF goes beyond traditional utilities. American Tower
Other companies didn't do as well last year, but could have better returns in the years to come. Cisco Systems
The big picture
Demand for energy and utilities 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.