Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you think the housing market is finally picking up, and that homebuilders and related companies have rosy futures, the SPDR S&P Homebuilders ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The homebuilder ETF's expense ratio -- its annual fee -- is a rather low 0.35%.
This ETF has lagged the world market over the past five years, but trounced it over the past three. 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.
What's in it?
Lots of homebuilding-related companies had strong performances over the past year. Homebuilding giant PulteGroup
Wallboard maker USG
Furniture and furnishings maker Leggett & Platt
Other companies didn't do as well last year but could see their fortunes change in the coming years. Tempur-Pedic International
The big picture
Long-term demand for homes 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 Tempur-Pedic International. The Motley Fool has a disclosure policy.