Some exchange traded funds may not offer as much diversification as you think.

Take an ETF that tracks the S&P 500 for example. Over 10% of the market cap is made up of the biggest technology stocks such as Apple (AAPL) , Microsoft (MSFT) , Alphabet (GOOGL) and Facebook (FB) .

"I think not enough people spend time to go to the website, look at what that ETF actually holds," said Peter Tchir of TheStreet's Income Seeker. "There is often a discrepancy between what it says it does and what it actually holds. So one, I want to look for something that's truly diversified where it's not two or three names have 25% of it because you're not getting what you want."

More of What's Trending on TheStreet:

Editors' pick: Originally published Nov. 3.


Don't miss the best videos of the week. Put Wall Street on Rewind and sign up for our weekly newsletter.

More from Video

Data Regulation on FAANG's Could Just Be Underway: Cramer's Investing Teach-in

Data Regulation on FAANG's Could Just Be Underway: Cramer's Investing Teach-in

Your Need to Know - Forward Look

Your Need to Know - Forward Look

3 Things Investors Can Do to Stay Strategic When the Market's Volatile

3 Things Investors Can Do to Stay Strategic When the Market's Volatile

How to Be a Tactical Investor in the Current Market

How to Be a Tactical Investor in the Current Market

Canopy Growth CEO: Here's What the Future of Cannabis Looks Like for Investors

Canopy Growth CEO: Here's What the Future of Cannabis Looks Like for Investors