One of the greatest advantages of exchange traded funds (ETFs) and one of the entire asset class's primary selling points is diversification. Thanks to ETFs, investors no longer need to engage in stock picking, a tricky endeavor at best.

ETFs give investors cost-efficient access to an array of widely followed equity benchmarks, including the S&P 500, the Russell 2000 and the S&P MidCap 400 Index, ensuring they can achieve their desired levels of diversification across various market cap segments with ease.

Asset allocation is an important driver of long-term total returns, underscoring the point that investors in North America should not always be fully allocated to just Canadian or U.S. stocks. With that in mind, ETFs have also made international investing easier and more cost-efficient, providing international diversification with enhanced liquidity with reasonable fees. ETFs can help North American investors achieve proper diversification with ex-North America developed markets and emerging economies.

The evolution of ETFs has also helped investors realize proper diversification across international market segments, making ex-North America mid- and small-caps more accessible than ever before. No longer do investors need to commit the bulk of their portfolios to large-cap equities if that is not their desired diversification strategy.

ETFs' diversification benefits extend to fixed income. In fact, bond funds are one of the fastest-growing areas of the ETF universe. ETFs allow fixed income investors to diversify with bonds ranging from U.S. Treasuries, corporate bonds and convertibles to emerging markets high-yield bonds.

One tip for ensuring maximum diversification is ensuring the ETFs in consideration are themselves, meaning they feature large numbers of holdings and are not concentrated at the sector or asset level. Here are ideas for diversification within ETF portfolios.

Vanguard Total Stock Market ETF (VTI)

Investors looking for diversification with U.S. stocks have plenty of ETFs to choose from, many of which appear diverse on the surface. However, using broad market ETFs or index funds to achieve diversification with U.S. equities does not always ensure proper diversification is realized.

In the most basic sense, a broad market fund should be just that: broad. The Vanguard Total Stock Market ETF has a deep bench with nearly 3,600 U.S., hailing from the large-, mid- and small-cap arenas. Adding extra diversity is the fact that VTI offers essentially no single stock risk as its top 10 holdings combine for less than 16% of the fund's weight.

VTI is a favorite among cost-conscious investors for its 0.05% annual fee, which makes it cheaper than 95% of rival funds.

Vanguard Total International Stock ETF (VXUS)

Looking to apply the diversification benefits of VTI to ex-US markets? Meet the Vanguard Total International Stock ETF, which holds a whopping 6,060 stocks.

Alone, that statistic implies VXUS is diversity, but there are other stats that enhance this ETF's diversification credentials. For example, VXUS is not a dedicated developed markets ETF as highlighted by its 19.3% weight to emerging markets. Additionally, the top 10 holdings in VXUS combine for barely more than 8% of the ETF's weight.

Overall, nearly 50 countries are represented in VXUS, a number that ensures geographic diversification.

Guggenheim S&P 500 Equal-Weight ETF (RSP)

Equal-weight is one of the strategies that kick-started the smart beta boom before the term “smart beta” was all the rage. Although equal-weight has evolved, one of its earliest iterations is embodied in RSP, which is to weight each component of a particular index equally, not by market capitalization.

That diminishes single stock risk while, in the case of RSP, increasing exposure to smaller stocks. The strategy has been a winner for investors as RSP has a long history of topping the cap-weighted S&P 500.

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