Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect investor interest in gold to continue and the price of gold to keep rising, the Market Vectors Gold Miners
ETFs often sport lower expense ratios than their mutual fund cousins. The Gold Miners ETF's expense ratio -- its annual fee -- is a reasonable 0.53%.
This ETF has performed reasonably, but it's also very young, with less than five years on the books. It underperformed the category of precious metals equity funds in 2007, 2008, and 2010, merely matching it in 2009. But those results were more than enough to beat the struggling S&P in three of those four calendar years. As with most investments, 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 12%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
The ETF holds about 30 different securities. Several of its components made strong contributions to its performance over the past year. Silver Wheaton
Other companies didn't add much to the ETF's returns last year. Golden Star Resources
The big picture
Demand for gold probably isn't going away anytime soon, but that doesn't make it a slam-dunk investment, especially at recent high prices. Read more about it before deciding whether you want to join the many who are bullish on it. And if you do, remember that a well-chosen ETF can grant you instant diversification across the industry -- and make investing in and profiting from it that much easier.
ETFs can help you find the way to better investing results. To find some great ETF investing ideas, take a look at The Motley Fool's special free report, "3 ETFs Set to Soar During the Recovery."