Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the utility industry to thrive over time as our growing population demands energy and communication services, among other things, the First Trust Utilities AlphaDEX ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The First Trust ETF's expense ratio -- its annual fee -- is 0.70%. That's higher than many ETFs, but also considerably lower than the typical stock mutual fund. The fund 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 well, handily beating the world markets 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.
What's in it?
Several utility companies had strong performances over the past year. Duke Energy, for example, soared 29% as it took advantage of low natural gas prices to produce energy, and as it continued investing heavily in renewable energy.
Natural gas and electricity company PPL
Plenty of other companies didn't do as well last year, but could see their fortunes change in the coming years. Frontier Communications
Level 3 Communications
Even worse, NII Holdings
The big picture
Demand for utilities 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.
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