Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the now-struggling solar energy industry to prosper over the long run and you want to buy into it while prices are low, the Guggenheim Solar ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The solar ETF's expense ratio -- its annual fee -- is a relatively low 0.70%. That's higher than that of many ETFs, but also considerably lower than the typical stock mutual fund. The ETF is fairly 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 rather poorly so far, but it's also very young, with just a few years on the books. The solar energy industry has had a rough few years, and thus its component companies have, as well. 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 turnover rate of 38%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
Solar energy companies have had a tough time over the past year, but many could see their fortunes change in the coming years. China-based JA Solar
The big picture
Demand for solar energy is likely to increase over time, but it won't be in a straight line. 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.