Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the steel industry to prosper over the long haul, as the world's economies recover and construction, infrastructure, and manufacturing work heats up, the Market Vectors Steel ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The steel ETF's expense ratio -- its annual fee -- is 0.55%. 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 not been kind to shareholders in recent history, underperforming the world markets over the past three and five years. But it's the future that matters most, and our long-struggling global economy will eventually perk up. 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 tiny turnover rate of 3%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
Few steel companies had strong performances over the past year. Mexico-based Grupo Simec
Most other steel companies didn't do as well last year, but they could see their fortunes change in the coming years. ArcelorMittal
Cliffs Natural Resources
The big picture
Long-term demand for steel 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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Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, holds no position in any company mentioned. Check out her holdings and a short bio. The Motley Fool owns shares of Arcelor Mittal. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.