Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the semiconductor industry to thrive as consumers and businesses continue to embrace and demand new electronic goods, the iShares PHLX SOX Semiconductor ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The semiconductor ETF's expense ratio -- its annual fee -- is a relatively low 0.48%. The fund is a bit on the small side, 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 actually not performed that well so far, underperforming the S&P 500 over the past three, five, and 10 years. Still, if you think that semiconductor stocks will be surging in the years ahead, it gives you easy access to about 30 of them. Investors with conviction sometimes need to wait for their holdings to deliver.
What's in it?
Several semiconductor companies had strong performances over the past year. Cirrus Logic
Other companies didn't do as well last year, but could see their fortunes change in the coming years. InterDigital
Then there's Applied Materials
The big picture
Demand for semiconductors 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.