Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect aerospace and defense companies to prosper over the long haul as peace remains elusive to civilization, and airplanes are not made obsolete by personal jet packs, the iShares Dow Jones US Aerospace & Defense ETF (AMEX: ITA) 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 iShares ETF's expense ratio -- its annual fee -- is a relatively low 0.47%. 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 reasonably well, beating the S&P 500, on average, over the past three and 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 10%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.

What's in it?
Several aerospace and defense companies posted net gains over the past year. Textron (NYSE: TXT), for example, gained 5%. Specializing in business jets, helicopters, many kinds of weaponry, and more, its fans expect sales to pick up as the economy recovers and business jet demand grows. Some worry about cuts in defense spending, though, which can hurt Textron and many others.

Boeing (NYSE: BA), meanwhile, gained 3%, finally delivering its first 787 Dreamliner. That brought great relief to shareholders (and those who'd ordered the planes), but the delay now has Air India asking for a hefty compensation. Boeing may not want to fork over hundreds of millions or more, as it would set a precedent that other customers might try to capitalize on, but Air India is a significant customer, too, and its loss would hurt.

Other companies didn't do as well last year, but could see their fortunes change in the coming years. United Technologies (NYSE: UTX) lost 1%, perhaps as investors decided what they thought of the company's $16.5 billion purchase of Goodrich. Fool analyst Brendan Byrnes likes the deal, as it boosts the company's presence in commercial aviation. United Tech is also positioned well to profit from emerging markets, as it already gets about 20% of its revenue from those fast-growing regions.

Huntington Ingalls Industries (NYSE: HII), essentially flat, stands to gain as countries place orders for military equipment, including its nuclear-powered ships and submarines, as well as many non-nuclear offerings. Management recently projected profit margin expansions and noted a "strong pipeline" of new business.

The big picture
Demand for aerospace and defense products and 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.

Learn about the 5 ETFs That Could Soar in 2012. And if you're looking for some great investments beyond ETFs, consider these 12 Dividend Stocks for 2012.