An S&P 500 ETF may have been your first investing pick, but it shouldn’t be your last. While the large-cap S&P 500 index has made its share of millionaires, it is increasingly dominated by only a few companies. The top 10 S&P 500 stocks comprise nearly 38% of the index, while the remaining 62% is split among 490 companies.
Diversifying outside the S&P 500 reduces concentration risk and provides other avenues of growth beyond Nvidia (NVDA), Microsoft (MSFT) and Apple (AAPL). The funds introduced here can achieve both goals. Read on to meet the largest and most popular funds in market segments that have little to no overlap with the S&P 500.
6 Top ETFs to Buy to Diversify Beyond the S&P 500
The table below identifies the six best ETFs to buy to diversify beyond the S&P 500. A closer review of each fund follows.
Metrics for current share prices and distribution yields are sourced from stockanalysis.com. Returns, composition metrics, expense ratios and net asset values are from fund websites.
1. iShares Core S&P Small-Cap ETF (IJR)
IJR by the numbers:
- Share price: $113.84
- Expense ratio: 0.06%
- 1-year return: 4.5%
- 5-year return: 11.6%
- Yield: 1.6%
- Number of holdings: 632
iShares Core S&P Small-Cap ETF Overview
IJR invests in small-cap stocks, which have market capitalizations ranging from $250 million to $2 billion. The fund’s largest industry exposures are financials (19.5%), industrials (19.3%) and consumer discretionary (13.9%). The top three holdings are loan servicer Mr. Cooper, aerospace technology provider Kratos Defense & Security and rare minerals producer MP Materials.
Why IJR Can Help Diversify
IJR has zero overlap with the S&P 500. With 632 holdings, the fund is also well-diversified within the small-cap segment.
Some analysts are bullish on small caps for 2025, citing appealing valuations, a positive regulatory environment and increasing merger and acquisition activity. Small caps are also likely to have lower tariff risk, since they normally focus on domestic business for growth.
Small caps can be volatile, so most investors will not use IJR as a core fund. A reasonable starting allocation would be 5% to 15%.
2. iShares Core S&P Mid-Cap ETF (IJH)
IJH by the numbers:
- Share price: $63.38
- Expense ratio: 0.05%
- 1-year return: 7.5%
- 5-year return: 13.4%
- Yield: 2.1%
- Number of holdings: 404
iShares Core S&P Mid-Cap ETF Overview
IJH invests in mid-cap companies, which have market values of $2 billion to $10 billion. Similar to IJR, the portfolio favors industrials (23.7%), financials (18%) and consumer discretionary (13.3%) stocks. The top three holdings are digital investment broker Interactive Brokers Group, construction service provider Emcor Group and HVAC contractor Comfort Systems USA.
Why IJH Can Help Diversify
None of the 404 stocks in the IJH portfolio are in the S&P 500. Information technology, the sector that dominates the S&P 500, comprises just 11.9% of IJH.
The 2025 outlook for mid caps is also positive, for the same reasons small caps are poised to shine. However, mid caps are larger and more established than small caps. Their larger size may provide better business visibility, financial resilience and capital access relative to their smaller counterparts.
A 5% to 15% allocation to mid caps is appropriate for many investors. You might lean to the higher side of the range if you decide to forgo small-cap exposure.
3. Vanguard Real Estate ETF (VNQ)
VNQ by the numbers:
- Share price: $90.49
- Expense ratio: 0.13%
- 1-year return: 2.4%
- 5-year return: 5.8%
- Yield: 3.8%
- Number of holdings: 155
Vanguard Real Estate ETF Overview
Vanguard’s real estate ETF invests in real estate investment trusts (REIT). REITs are companies that own and manage real estate. They pay no corporate taxes and distribute 90% of their taxable income to shareholders.
VNQ’s primary exposures are to property owners in health care (13.7%), retail (13.2%) and telecom towers (11.50%). The top three holdings are Vanguard’s institutional real estate fund VRTPX, senior housing operator Welltower and industrial property owner Prologis.
Why VNQ Can Help Diversify
Thirty-one of VNQ’s 160 holdings are in the S&P 500, including Welltower and Prologis. In terms of weight, the overlap is low. For example, Welltower is 6.1% of VNQ but only 0.2% of the S&P 500.
REITs make their money on real estate values and rents, two values that generally hold up well in inflationary periods. So it’s not surprising that a 2022 analysis by industry group NAREIT concluded that REITs outperform the S&P 500 in high-inflation periods. This means VNQ exposure could partly offset the next inflation-related downturn in stocks.
REITs should be a non-core holding with an allocation of 5% to 15%.
4. Vanguard Total International Stock ETF (VXUS)
VXUS by the numbers:
- Share price: $71.47
- Expense ratio: 0.05%
- 1-year return: 14.2%
- 5-year return: 9.3%
- Yield: 2.7%
- Number of holdings: 8,615
Vanguard Total International Stock ETF Overview
VXUS invests in small-, mid- and large-cap stocks located outside the U.S., with exposure to Europe (39%), emerging markets (27.2%), the Pacific (25.4%) and North America (7.7%). The top holdings are chip foundry Taiwan Semiconductor, online advertising and content company Tencent Holdings and enterprise software provider SAP.
Why VXUS Can Help Diversify
VXUS has no overlap with the S&P 500. Finance is the most heavily weighted sector in VXUS, while the S&P 500 is concentrated in technology.
VXUS has outperformed S&P 500 ETFs this year, notching a 22.7% gain vs. 10.4% for the SPDR S&P 500 ETF Trust. Schwab is upbeat about international stocks for the remainder of 2025, partly due to their attractive valuations and weakness in the U.S. dollar.
International stocks can comprise 20% to 30% of your portfolio.
5. Vanguard Total Bond Market ETF (BND)
BND by the numbers:
- Share price: $73.53
- Expense ratio: 0.03%
- 1-year return: 3.4%
- 5-year return: -1.1%
- Yield: 3.8%
- Number of holdings: 11,402
Vanguard Total Bond Market ETF Overview
BND invests in taxable, investment-grade bonds issued in U.S. dollars. About 80% of the portfolio has maturities ranging from one to 10 years, and the portfolio may be moderately price-sensitive to interest rates. Bond types include Treasury securities (48.9%), government mortgage-backed securities (19.6%) and corporate industrial bonds (14.4%).
Why BND Can Help Diversify
BND provides broad exposure to the U.S. bond market, which can add stability and income to a portfolio otherwise focused on the S&P 500. Bonds can fluctuate in value, but they’re generally less reactive than stock prices. They can also move in the opposite direction of stocks, rising when investors sour on equities.
The right bond allocation depends on your risk tolerance and investment goals. If your goal is to preserve your wealth—say, because you are retired—you might want 40% to 60% exposure to bonds. If you’re young and interested in long-term growth, a 10% to 20% allocation is more appropriate.
6. SPDR Gold Shares (GLD)
GLD by the numbers:
- Investment focus: Gold
- Share price: $308.09
- Expense ratio: 0.40%
- 1-year return: 35.4%
- 5-year return: 10.5%
- Yield: NA
- Number of holdings: 1
SPDR Gold Shares Fund Overview
GLD invests in physical gold bullion. Shareholders participate in gold spot price changes, less fund expenses, without having to buy, store and insure their own gold bars.
Why GLD Can Help Diversify
Gold is a safe-haven asset that tends to appreciate during periods of high inflation and economic uncertainty—circumstances that often coincide with stock price declines.
The precious metal has performed very well recently, increasing more than 35% over the last 12 months. Some analysts believe the run will continue. In June 2025, J.P. Morgan predicted gold’s price could reach $3,675 per ounce in the fourth quarter and nearly $4,000 in mid-2026. Gold futures contracts currently trade just below $3,400.
According to State Street Global Advisors, 83% of advisors recommend a gold allocation of 10% or more. Surveyed high-net-worth investors had an average gold allocation of 21% in 2024.
Bottom Line
The S&P 500 has made headlines for its performance in recent years, but it’s not the only game in town. Adding small- and mid-caps, international stocks, REITs, bonds or gold to your portfolio provides multiple pathways to growth, plus some cushion if large caps weaken. For more ETF investing ideas, see the best ETFs for 2025.