Most investors have a portfolio strategy that mirrors the movement of the major U.S. stock indexes. They achieve this through a combination of individual stocks and ETFs, and thus creating a diversity that brings the performance of the portfolio back to the mean and in line with the big name stocks.
Over the last few years, a number of ETF providers have launched investment vehicles that offer exposure to niche sectors of the market. The ETFs track everything from single commodity futures to small frontier markets in Southeast Asia. Risk-tolerant investors will want to note these excelling ETFs.

IN PICTURES: 20 Lazy Ways To Save Money

Under-followed ETFs
Teucrium Corn Fund
(NYSE: CORN) trades like an ETF on the NYSE and is composed of three corn futures contracts. The fund began trading in early June and since that time, the price of corn has skyrocketed and CORN has gone along for the ride. Even with an expense ratio of 1%, the fund is a better option for most investors versus opening a futures trading account. Corn is not the only agricultural commodity doing well. Months of inclement weather around the globe, combined with increasing demand from emerging markets, have the sector on the rise. A recent USDA report regarding corn is what sent the fund higher in early October and has CORN futures looking bright.

One of the most hated sectors is the airline stocks. Unless, of course, you invested in the Guggenheim Airline ETF (NYSE:FAA) this year. The ETF is up 35% and trading at its best level ever. Recent earnings reports from the sector have shown increased earnings as well as higher ticket prices - a win-win for the sector. The ETF is heavily concentrated, with the top three stocks making up 50% of the allocation. They include the three big-name U.S. airlines: United Continental Holdings (NYSE:UAL), Delta Air Line (NYSE:DAL), and Southwest Airlines (NYSE:LUV). If you want exposure to the sector, FAA is hands-down a better choice than picking just one airline stock.

Developing Nations
Eastern Europe is a small region that is often overlooked by investors, especially Poland. The iShares MSCI Poland Investable ETF (NYSE:EPOL) began trading in late May and now investors have access to the country via a basket of stocks. The ETF trades with a low P/E ratio of 15.97 and pays a 1.3% dividend. Nearly half of the stocks in the ETF are financials, which is the norm for many developing nations. EPOL is aggressive, but with 37 stocks in the portfolio, the risk is mitigated.

The infrastructure build out in the emerging markets has been a hot topic for years, but until the recession ended, the related stocks did not rally. The PowerShares Emerging Markets Infrastructure ETF (NYSE:PXR), which began trading in late 2008, recently hit a new historic high on the back of the emerging market strength and the money flowing into infrastructure projects. This is one niche sector that has the ability to continue higher in the face of a slowing U.S. economy. (For more, see Re-evaluating Emerging Markets.)

Bottom Line
All four of these niche ETFs could find a home in investor's portfolios, but it comes down to each person's goals and risk tolerance. As always, please do your own due diligence before investing your money. (For related reading, check out 5 Ways To Find A Winning ETF.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Investing Basics

    Why do Debt to Equity Ratios Vary From Industry to Industry?

    Obtain a better understanding of the debt/equity ratio, and learn why this fundamental financial metric varies significantly between industries.
  2. Mutual Funds & ETFs

    ETF Analysis: iShares JPMorgan USD Emerg Markets Bond

    Learn about the iShares JPMorgan USD Emerging Markets Bond fund, which invests in bonds of sovereign and quasi-sovereign entities from emerging markets.
  3. Mutual Funds & ETFs

    ETF Analysis: SPDR Dow Jones International RelEst

    Learn how the SPDR Dow Jones International Real Estate exchange-traded fund (ETF) is managed and for whom the ETF is most appropriate.
  4. Active Trading Fundamentals

    How Hedge Funds Front-Run Index Funds to Profit

    Understand what front running is, and learn how hedge funds use this investing strategy to profit from the anticipated stock buys of index funds.
  5. Mutual Funds & ETFs

    ETF Analysis: Schwab US Large-Cap

    Discover how the Schwab U.S. Large-Cap exchange-traded fund is managed, the index it tracks and the investors for which it is most appropriate.
  6. Mutual Funds & ETFs

    ETN Analysis: Rogers Intl Commodity Energy Total Return

    Learn more about the Rogers International Commodity Total Return, which is an exchange-traded note that tracks a broad index of commodity futures.
  7. Investing Basics

    Explaining Trade Liberalization

    Trade liberalization is the process of removing or reducing obstacles that impede the exchange of goods and services between nations.
  8. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  9. Mutual Funds & ETFs

    ETF Analysis: ProShares UltraPro Nasdaq Biotech

    Obtain information about an ETF offerings that provides leveraged exposure to the biotechnology industry, the ProShares UltraPro Nasdaq Biotech Fund.
  10. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Europe Financials

    Learn about the iShares MSCI Europe Financials fund, which invests in numerous European financial industries, such as banks, insurance and real estate.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  3. Profit Margin

    A category of ratios measuring profitability calculated as net ...
  4. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis ...
  5. Brazil, Russia, India And China ...

    An acronym for the economies of Brazil, Russia, India and China ...
  6. Debt Ratio

    A financial ratio that measures the extent of a company’s or ...
RELATED FAQS
  1. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>
  4. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  5. What is the difference between the return on total assets and an interest rate?

    Return on total assets (ROTA) represents one of the profitability metrics. It is calculated by taking a company's earnings ... Read Full Answer >>
  6. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!