How to Become a Savvy Investor in Sector ETFs

If you buy a single stock, your fate rests on the ups and downs of that one company. If you want to moderate this risk but still aim for your target, investing in an exchange traded fund that focuses on a particular sector is one way to go. "For many stock-pickers, sector ETFs make sense," says Robert Holderith, president and CEO of Emerging Global Shares. "Imagine that you really like Apple (AAPL) and maybe two other gadget names. You can pick one or two stocks but be saddled with stock-specific risk." A tech-sector ETF would offer broader exposure, he says.