Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to invest in companies that have relatively recently debuted on the stock market, the First Trust U.S. IPO Index ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The IPO ETF's expense ratio -- its annual fee -- is 0.60%. That's a bit higher than that of many ETFs, but also considerably lower than that of the typical stock mutual fund. (The fund is very 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.)
Interestingly, this ETF has a good performance record, while many IPOs don't end up doing too well at first. That's partly because it doesn't just focus on brand-new IPOs. Over the past five years, on average, it has topped the S&P 500. 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 recently released stocks had strong performances over the past year. Cobalt International Energy
Philip Morris International
Other companies didn't do as well last year but could see their fortunes change in years to come. NXP Semiconductors
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.
Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, holds no position in any company mentioned. Click here to see her holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Philip Morris International and NXP Semiconductors. The Motley Fool has a disclosure policy.