Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect water-related companies to thrive over time as our planet's growing population keeps demanding clean water, the First Trust ISE Water Index ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The water ETF's expense ratio -- its annual fee -- is 0.6%. The fund is fairly small, 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 has performed rather well, beating the world market over the past three and five years. 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?
More than a handful of water-related companies had strong performances over the past year. Mueller Water
Other companies didn't do so well last year but could see their fortunes change in years to come. Veolia Environnement
The big picture
Demand for water 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, owns shares of Emerson Electric and Veolia Environnement, but she holds no other position in any company mentioned. Click here to see her holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Emerson Electric and Veolia Environnement. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.