Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect companies addressing environmental needs to thrive as concerns grow about our planet's health, the Market Vectors Environmental Services ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The environmental ETF's expense ratio -- its annual fee -- is a relatively low 0.55%. The fund is 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 has performed relatively well, 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, but beat 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.
With a low turnover rate of 1%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do. And with just 20 holdings, it has concentrated its assets, too.
What's in it?
Several companies in environmental services had strong performances over the past year. Rentech
Other companies didn't do as well last year but could see their fortunes change in coming years. Veolia Environment
The big picture
Demand for environmental services 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, whom you can follow on Twitter here, owns shares of Veolia Environnement, 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 Darling International. Motley Fool newsletter services have recommended buying shares of Waste Management and Veolia Environnement, as well as writing a covered strangle position in Waste Management. 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.