Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect Internet-related companies to thrive over time, as more and more people spend more time online (especially in developing economies), the PowerShares NASDAQ Internet ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The PowerShares ETF's expense ratio -- its annual fee -- is 0.60%. 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, trouncing the world market over the past three years. But it's also very young, with just a few years on the books. 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 23%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
Several Internet companies had strong performances over the past year. Cloud computing, and online content delivery specialist Akamai Technologies
Up 24%, priceline.com
Other companies didn't do as well last year, but could see their fortunes change in the coming years. China-based Twitter-like company Sina
China’s Google-like search-engine giant Baidu
The big picture
Demand for Internet services 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. Click here to see her holdings and a short bio. The Motley Fool owns shares of Baidu.com and Priceline.com. Motley Fool newsletter services have recommended buying shares of SINA, Baidu.com, and Priceline.com. The Motley Fool has a disclosure policy.
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