5 Tips for Better ETF Portfolio Diversification

All News:

• Platinum and Palladium ETFs are Long-Term Bets
• Nasdaq ETF Near 200-Day Average as Apple, Cisco Weigh
• Bank ETFs Hit Again on Economy, Capital Levels

Although many exchange traded fund (ETF) investors thought they were perfectly diversified throughout their portfolios, many still took their share of losses. Is there a way to diversify better? You bet.

• Hold a diversified stock fund or ETF rather than a single stock
• Investing in international ETFs can give you global diversification and insulate you better from trouble at home.
• International diversification may mean limiting the total exposure in your portfolio, and don’t forget to rebalance. [5 Things to Avoid When ETF Investing.]
• Diversify in other asset classes, too, such as in bonds or domestic stocks; for example, don’t put your entire domestic exposure in large-caps. Spread it out a little.
• Allocate some of your portfolio to commodities, bonds and real estate when appropriate, too. [7 ETF Rules to Mind.]

Most of all, remember nothing is completely foolproof and immune from stock market volatility. A diversified portfolio means you are prepared for market swings, but does not mean you are safe from taking losses.