Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the construction industry to grow as the global economy eventually heats up again, the Dynamic Building & Construction Portfolio ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The building ETF's expense ratio -- its annual fee -- is 0.63%. That's a bit higher than many ETFs, but also considerably lower than the typical stock mutual fund. The ETF 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 not performed spectacularly, largely because of the lengthy recession we experienced recently. It underperformed the S&P 500, on average, over the past three and five years. It's the future that counts most, though; and of course, as with most investments, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.
With a somewhat steep turnover rate of 75%, this fund, like many of its mutual fund peers, isn't committing to its picks for very long. Low turnover ratios can reflect more conviction. The fund holds only about 30 stocks, though, which does reflect some conviction. Many funds spread their assets over hundreds of holdings.
What's in it?
Several construction-related companies had strong performances over the past year. Tractor Supply
Other companies didn't do as well last year, but could see their fortunes change in the coming years. AECOM Technology
The big picture
Demand for construction services and products will eventually rebound. 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.