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 (NYSE: GDX) ETF 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 several dozen of them simultaneously.

The basics
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 (NYSE: SLW), for example, rocketed ahead some 190%, focusing mostly on silver but also involved in gold on a small scale. It has deals in place to profit from the silver in others' mines, such as Goldcorp's (NYSE: GG) Mexican Penasquito mine. (Goldcorp has bulls of its own, as it expects to grow its gold production by 60% over the coming five years.) Hecla Mining (NYSE: HL) soared almost 70% over the past year, and while some worry that it's gotten a bit ahead of itself, others point to its value as "low-debt, free-cash-flow-generating, well-managed inflation fighter."

Barrick Gold (NYSE: ABX) advanced a relatively paltry 33% over the past year, but that had a major effect on the fund, as the top holding makes up close to 17% of assets.

Other companies didn't add much to the ETF's returns last year. Golden Star Resources (AMEX: GSS), for example, has lost about 18% over the past year. Given its relatively high production costs as a smaller company in the industry and its recently reduced projections, it might not be a big contributor in 2011, either.

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."

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.