Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some mid-cap stocks to your portfolio, the Vanguard S&P Mid-Cap 400 Index ETF (NYSEMKT:IVOO) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The Vanguard ETF's expense ratio -- its annual fee -- is a very low 0.17 %. The fund is fairly small, too, so if you're thinking of buying, beware of possibly large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.

This ETF is too young  to have a sufficient track record to assess. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

With a low turnover rate of 13%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.

Why mid-cap companies?
Mid-caps can be wonderful additions to portfolios because they've proven themselves to some degree, having grown to mid-cap size, but they also still have a lot of room to grow -- before they become large-caps.

Plenty of mid-cap companies  had strong performances over the past year. Regeneron Pharmaceuticals (NASDAQ:REGN) shot up more than 150%, mainly on large sales of its macular degeneration drug, Eylea, which has also received approvals recently to broaden its scope of treatment as well as its geographic reach. Some see the stock as having gotten ahead of itself at this point.

Vertex Pharmaceuticals (NASDAQ:VRTX) gained 50%, with some viewing it as a potential monster stock of the future, with its promising (but possibly problematic) cystic fibrosis treatment, Kalydeco. Meanwhile, its hepatitis C drug Incivek has seen sales slump a bit. It has lined up some possible partners for combination formulas with its hep C drug VX-135, too. Goldman Sachs isn't impressed, though, with its analysts downgrading Vertex recently.

Realty Income (NYSE:O), for example, advanced 20%, and yields an attractive 4.6%. It's a retail real estate investment trust (REIT), leasing property to retailers and aiming to lock in long-term income through long leases. The company has been investing in growing its property portfolio, and its occupancy rate has been rising, as well. It's also a dividend star, upping its payout for 60  consecutive quarters. In its last quarter, revenue rose a solid 13% and its portfolio occupancy was 97%.

Other companies didn't do quite as well last year but could see their fortunes change in the coming years. New York Community Bancorp (NYSE:NYCB), up just 8%, has an appealing 7.4% dividend yield and a seemingly low valuation. The company isn't expected to grow very rapidly, but it does seem to offer a sizable upside. Bears don't like its high cost of funds relative to peers, and some are skeptical about its growth-via-acquisition strategy. The bank got whacked by Hurricane Sandy, too, because of its focus on the New York region. In a bit of trivial but useful news, the company is changing  its ticker symbol to NYCB soon, to represent its full name.

The big picture
A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.