Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect companies involved in modernizing the electrical grid to prosper over time as new meters are installed, infrastructure is updated, and alternative energies are accommodated, the First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The Smart Grid ETF's expense ratio -- its annual fee -- is 0.70%. That's higher than many ETFs, but also considerably lower than the typical stock mutual fund. (The fund is very small, too, so if you're thinking of buying, beware of occasionally large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.)
This ETF doesn't have much of a performance to evaluate yet, as it's just a few years old. It underperformed the market in the past two years, but 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 28%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
Relatively few smart-grid-related companies had strong performances over the past year. General Electric
Companies that didn't do as well last year could see their fortunes change in the coming years. Power-One
Canadian oil and gas giant Suncor Energy
The big picture
Demand for energy 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.
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 Power-One. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.