Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the food and beverage industry to thrive over time as the world's population grows, economies develop, and demand for food and drink keeps rising, the PowerShares Dynamic Food & Beverage ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The PowerShares ETF's expense ratio -- its annual fee -- is 0.63%. The fund is fairly small, too, so if you're thinking of buying, beware of possibly large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.
This ETF has performed rather well, outpacing the world market 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.
With a somewhat steep turnover rate of 134%, this fund, like many of its mutual fund peers, isn't committing to its picks for very long. Low turnover ratios can reflect more conviction.
What's in it?
More than a few food and beverage companies had strong performances over the past year. Organic and natural food products company Hain Celestial
Seed and herbicide giant Monsanto
Other companies didn't do as well last year, but could see their fortunes change in the coming years. Chiquita Brands International
The big picture
Demand for food and beverages 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 Hain Celestial. Motley Fool newsletter services have recommended buying shares of Hain Celestial and creating a modified stock repair against synthetic long position in Monsanto. The Motley Fool has a disclosure policy.
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