Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you want some undervalued small caps in your portfolio because of their great potential to grow, the Vanguard Small Cap Growth ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The Vanguard ETF's expense ratio -- its annual fee -- is a very low 0.10%, which won't eat into your returns much. (Vanguard is known for low fees.)
This ETF has performed rather well, beating the large-cap S&P 500 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?
Plenty of small-cap companies had strong performances over the past year. One of the best examples is Pharmacyclics
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The big picture
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.
There are plenty of other appealing ETFs out there to consider. Learn about three that our Fool analysts think are a good investment in the Fool's free report "3 ETFs Set to Soar During the Recovery."