Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the real estate industry to thrive over time and want to invest in some real estate investment trusts (REITs), the Vanguard REIT Index
ETFs often sport lower expense ratios than their mutual fund cousins. The Vanguard ETF's expense ratio -- its annual fee -- is an ultra-low 0.12%. (Vanguard is known for low fees.)
This ETF has a mixed performance record, beating the S&P 500, on average, over the past three years, but underperforming it over the past five. 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 16%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
Plenty of real-estate companies had strong performances over the past year. Digital Realty Trust
Gaining 15% and yielding 2.4% is General Growth Properties
Health Care REIT
Other companies didn't do as well last year, but could see their fortunes change in the coming years. Vornado Realty Trust
The big picture
Demand for real estate isn't likely to ever shrivel up. 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. Motley Fool newsletter services have recommended buying shares of Health Care REIT. The Motley Fool has a disclosure policy.