When I wrote about the rising popularity of exchange-traded funds a couple of weeks ago, it was hardly surprising to learn that most of you have been increasing your exposure to these baskets of stocks, and for the usual reasons.

They charge ultralow management fees. Those that track major indexes tend to outperform most actively managed mutual funds. They’re a buy-and-forget it investment.

So let’s dig a little deeper this week into a type of ETF that is not embraced quite as widely: The sector fund, which tracks specific groups of stocks.

These funds are anything but diversified. Some hold only real estate investment trusts. Others hold energy producers, gold producers, stocks tied to the artificial intelligence theme or pretty much anything else you can imagine.

They tend to be more expensive, too.

The BMO Equal Weight Utilities Index ETF (ticker: ZUT in Toronto) charges a Management Expense Ratio of 0.61 per cent. That’s still cheap by mutual fund standards, but about 10 times the cost of BMO’s index-tracking S&P/TSX Composite ETF, which has an MER of just 0.06 per cent.

Why bother with a sector fund then?

They can offer investors an ideal combination of a focused bet with diversification across an entire sector. If one company in the sector ETF stumbles, you’re okay.

One sector ETF that I’ve embraced for over a decade, and will defend with my dying breath: A fund that holds all Big Six banks.

In the interests of full disclosure, it’s the BMO Equal Weight Banks Index ETF (ZEB in Toronto). But there are equally great options from other providers, as well as variations that weight the six stocks based on recent performance or dividend yield.

When I’ve mentioned this approach to bank stocks in the past, some readers have highlighted a couple of drawbacks with sector funds.

Namely, the MER is a waste when you can easily buy all six stocks. Another complaint: The dividend yield, at about 3 per cent, is not attractive.

Fair enough. But here are four reasons why I stick with what I’ve got.

One, the fees include regular rebalancing to maintain equal weights for each stock.

You get something for your money here. For the fund to maintain an equal weighting in each of the six stocks (and the same would hold true for a utilities fund or a REIT fund), it must adjust its holdings. To do that on your own could raise your trading costs, and will certainly keep you busy. One other point on fees: They’ve been falling.

Two, the ETF removes the temptation to time the market.

This is my favourite feature. When a bank stock hits an air pocket and falls, an equal weight bank stock ETF will push aside investor fears and buy the dip. Given that losing bank stocks tend to recover over time – take a look at Toronto-Dominion Bank over the past year – that can be a good thing.

Three, bank stocks rock.

Over the past 10 years, the Solactive Equal Weight Canada Banks Index – the underlying index for the BMO ETF – has delivered a total gain of 346.9 per cent, as of Monday, including dividends.

Equal weight banks have beaten S&P/TSX Composite Index by nearly 98 percentage points over this period (since we’re talking about indexes here, these performance figures do not include fees). The banks have even outperformed the mighty S&P 500 by 11 percentage points (in U.S. dollars).

That doesn’t mean bank stocks will always outperform. Another financial crisis or a steep recession will hurt. But it’s a good sign that these things do okay in the long term.

Four, you get paid monthly.

Individual banks pay their dividends every three months. With my ETF, you get paid monthly. That’s not a big deal, but could come in handy during retirement.

Yes, the dividend yield is currently sitting at just over 3 per cent, which is low by historical terms.

But that’s a feature, not a bug: The yield has fallen as bank stocks have soared. Consider that Royal Bank of Canada’s dividend yield is below 2.9 per cent right now.

As with any sector ETF, this one gives me a focused bet on a small group of stocks, without taking any huge risks on a single name – which is exactly what I want.

Are you a fan of any particular sector ETF? Talk your book at dberman@globeandmail.com.