Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the global agriculture industry to thrive over time as the world's population keeps growing and demanding food and nutrition products, the PowerShares Global Agriculture ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The PowerShares ETF's expense ratio -- its annual fee -- is 0.75%. That's more than many ETFs, but also significantly 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 reasonably beating the market over the past three years, but it's also very young, with just a few years on the books. It underperformed the S&P 500 in 2008 and 2010, though it beat it substantially in 2007 and 2009. 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 low turnover rate of 19%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
Several companies related to agriculture had strong performances over the past year. GNC Holdings
Other companies didn't do as well last year, but could see their fortunes change in the coming years. Major potash producers PotashCorp
The big picture
Demand for agriculture 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.
The fertilizer industry isn't the only one getting investors excited. To be introduced to a stock with both stability and growth as well as the potential for massive expansion, take a look at The Motley Fool's free report on our top stock for 2012.