After a few turbulent weeks, the stock market is on the rise again. S&P500 (SNPINDEX: ^GSPC) has risen by more than 8% in the last three weeks alone, while the technology-heavy Nasdaq (NASDAQINDEX: ^IXIC) has increased by almost 10% during this time.

Technology stocks in particular tend to thrive when the market is on the up, and investing in the technology sector can be a fantastic way to build wealth and beat the market.

However, the technology sector also tends to be riskier than many other industries, as these types of companies are often more volatile than their more established counterparts. It is therefore important to invest carefully.

Fortunately, there is a way to invest in the technology sector that requires less research and carries less risk than buying individual stocks: investing in industry-specific ETFs.

What are sector-specific ETFs?

An ETF, or exchange-traded fund, is a basket of securities combined into a single investment. When you invest in just one ETF, you instantly own a share of dozens or hundreds of stocks.

One of the biggest advantages of ETFs is that they are much easier to manage than a portfolio full of individual stocks. Instead of researching 25 to 30 individual companies, you only need to research one or two ETFs to achieve sufficient portfolio diversification.

While there are broad-based funds that include stocks from all areas of the market, industry-specific ETFs only contain stocks from specific sectors. By investing in a technology ETF, for example, you can buy hundreds of technology stocks in a single fund.

Can these ETFs beat the market?

ETFs generally offer less customization than individual stocks. You have no choice but to invest in every stock in the fund, so if it includes underperforming companies, it could reduce your returns. However, strong ETFs still have a lot of potential for above-average returns.

For example Vanguard S&P 500 ETF (WKN: A2P522) is a broad-based fund that tracks the S&P 500 index, which is widely considered a strong gauge of overall market performance. Over the past 10 years, this ETF has delivered an average return of 13.11% per year.

Let us now compare this with the Vanguard Information Technology ETF (WKN: A2PKX: VGT)a technology-focused ETF that contains 318 stocks from various sectors of the information technology industry. Over the last 10 years, this fund has generated an average return of 20.63% per year.

Of course, there is more to consider than just annual returns when selecting an investment. However, technology-specific ETFs have the potential to significantly outperform the market with limited risks.

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A big risk to consider before buying

The main risk with technology stocks in general is their increased volatility. While the technology sector often makes faster gains during upswings, it also gets hit harder during market downturns compared to many other industries. If you choose to invest in a technology ETF, you should expect sharper ups and downs.

Because of the increased overall risk associated with technology stocks, it’s especially important to make sure the rest of your portfolio is sufficiently diversified. While a technology ETF will provide sufficient diversification within one industry, you also need a wide selection of stocks from other industries.

Sometimes, adequate diversification can be achieved simply by investing in a broad-based ETF alongside a technology ETF. Broad-based funds, such as S&P 500 ETFs, may produce lower returns than technology funds, but they can help minimize risk—especially during periods of high volatility.

Investing in industry-specific ETFs can be a smart way to get exposure to a specific market sector with less effort than buying individual stocks. If you understand the risks and rewards of this particular investment (and make sure your portfolio is properly diversified), you could be well on your way to achieving well-above-average returns without lifting a finger.

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Katie Brockman owns shares of the Vanguard S&P 500 ETF and the Vanguard World Fund-Vanguard Information Technology ETF. The Motley Fool owns shares of and recommends the Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

Want to invest in tech stocks with less risk? Try this proven strategy was originally published by The Motley Fool