Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the oil and gas industry to do well over the long haul, the iShares Dow Jones U.S. Oil and Gas Exploration Index ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The iShares ETF's expense ratio -- its annual fee -- is a relatively low 0.47%. The fund is a bit small, too, so if you're thinking of buying, beware of occasional 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.
With a low turnover rate of 13%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
More than a handful of oil and gas companies had strong performances over the past year. Phillips 66
Other companies didn't do as well last year, but could see their fortunes change in the coming years. Chesapeake Energy
The big picture
Demand for oil and gas 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 Devon Energy. Motley Fool newsletter services have recommended buying shares of Devon Energy. The Motley Fool has a disclosure policy.
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