Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the engineering and construction industry to thrive over time as the global economy eventually heats up and demand for building materials and services increases, the First Trust ISE Global Engineering and Construction Index ETF (NYSE: FLM) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The First Trust ETF's expense ratio -- its annual fee -- is 0.70%, which is higher than many ETFs, but also lower than the typical stock mutual fund. The fund is very small, too, so if you're thinking of buying, beware of potentially large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.

This ETF hasn't performed too impressively in its relatively short life, but then it has lived during a global slowdown. It underperformed the world market over the past three 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.

With a low turnover rate of 22%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.

What's in it?
Few engineering and construction companies had strong performances over the past year. Chicago Bridge & Iron (NYSE: CBI), for example, gained just 2%. The company recently announced a big $3 billion acquisition of Shaw Group, which worries bears, due to the debt the company is taking on for it. Many in this industry try to keep debt obligations low, since cyclicality can render cash flow very lumpy. Some also don't like Shaw's involvement in nuclear energy.

Other companies did even more poorly over the last year, but could see their fortunes change in the coming years. Fluor (NYSE: FLR), down 11%, has been more heavily involved in emerging markets than many peers, which bodes well for it, as those regions are, by definition, developing and building heavily. Some worry about slowing growth in the regions, but even their slowed growth can top that of developed nations.

Foster Wheeler (Nasdaq: FWLT), down 18%, got a thumbs-up from respected research company Standpoint in June, partly on its expected 24% growth rate over the coming years. Then, this month, Standpoint moved it back, from "buy" to "hold." Foster Wheeler's cash generation has slowed, and it remains a volatile stock. Its latest quarter featured slowing orders, and decreased revenue and net income. Management remains bullish, though, and points to aggressive stock buybacks, decreasing the share count by 28% since 2008.

McDermott International (NYSE: MDR), down 26%, recently reported disappointing second-quarter earnings, with revenue up 5%, less than expected, due to sluggishness in the Asia Pacific region, and costs rose faster than revenue. Its order backlog did grow by 23%, though, and remains at near-record levels, and its balance sheet is strong.

The big picture
Long-term demand for engineering and construction 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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