Charles Schwab, one of the country’s largest asset managers with more than $200 billion in assets under management, has made quite an entrance into the ETF arena. The San Francisco-based company announced the launch of its first eight exchange-traded funds, including four that will begin trading on Tuesday. Each of the exchange-traded products from Schwab will compete directly with ETFs already offered by the “big 3″ of the ETF industry – iShares, Vanguard, and State Street – including some of the largest and most liquid ETFs on the market.

The four ETFs set to begin trading on Tuesday include:

It can be useful to know how the average other guy is allocating assets, whether you are inclined to follow the crowd or to do something else.

Asset Allocation Among Public Investment Funds:

In his 2001 Fortune magazine article, Warren Buffett used the ratio of the market value of all US publically traded securities to Gross National Product (GNP) as a yardstick to measure the stock market valuation. He stated that

"The ratio has certain limitations in telling you what you need to know. Still, it is probably the best single measure of where valuations stand at any given moment".

Charles Schwab, one of the world’s best known and largest asset management firms, recently took another step towards finally breaking into the rapidly-expanding ETF industry.

Earlier this month, Schwab filed paperwork with the SEC to launch nine ETFs. The proposed funds will have the benefit of the Schwab name (and the tremendous resources that come along with it), but will still face an uphill battle, given the firm’s late arrival to a now very crowded market.

Looking at the US stock market from a high altitude is not encouraging. Favorable valuation and recovery timing arguments are interesting, but negative price behavior is the current reality.

The best time to commit additional cash to stocks is when valuation arguments and price behavior arguments agree. Agreement would be attractive valuation and rising prices.

Mutual funds have been mostly lagging on getting into ETF, but now they might be making a huge push to get in.

Last month, the investment management department of The Charles Schwab Corp. (SCHW) filed for exemptive relief to create its first ETF. Charles Schwab had previously not involved itself with ETFs due to low-margin business compared to funds.

By Matthew Hougan

What's the best U.S. total market ETF?

If you're looking at January performance, the answer is clear: the ELEMENTS Benjamin Graham Total Market ETN (BVT).

I have no position in Apple (AAPL) right now, and haven’t for a few weeks. Why, you may ask? Because the short-term trend has been indeterminate, sideways and choppy at best. Over the longer-term, the downtrend is intact, albeit in a weakened fashion. And it’s very difficult to profit in this kind of environment, so I have been recommending cash to Apple Investors and my subscribers. But the downtrend is about to resume, and it’s time to take a stand.

In a sideways and volatile market like this, individual stocks can make or break you. There’s simply too much risk for the small investor to profit from individual stocks. Look at AAPL over the past week. It’s down just 0.5% for the week, but intra-week it has moved in a range spanning over 8%! AAPL started the week with a huge gap up, a very encouraging sign, as gaps can provide good support going forward. But it didn’t hold, as AAPL erased the gap the following day. Wednesday was a day of indecision, followed by a weak attempt to regain the gap on Thursday. But then Friday revealed the true intent of the market, and that’s to resume the overall downtrend.

Mutual fund money flows, which are a good indicator of overall retail investor market views, have been strongly negative in recent months. Global and international equity funds have experienced greater negative money flows than domestic US mutual funds this year. Until the 2008 market drops, US equity funds received lower money inflows than global and international funds.

Representative US equity funds include:

By Jim Wiandt

Last week was breathtaking. NEVER—not even in 1929—has the Dow seen such a big decline by points OR percentage.

By Jim Wiandt

Year-to-date, Matt Hougan's 15 (actually 13.65) basis point portfolio is hanging tough, while Bobo is drinking heavily.

We selected the single country funds available in the Index Universe database for calendar year return analysis. Cumulative and annualized returns are important, but so too are discreet calendar years.

While statistical tools may theoretically, adequately describe variation or consistency of returns, a visual impression can be helpful too. This analysis is primarily visual.

If you don't know who David Swensen is, you should. He is the Chief Investment Officer of Yale's endowment and is widely considered one of the top institutional managers in the world. He has also written two well-received books on portfolio management and investing. An article about him from Summer of 2007 is very enlightening.

Yale has done very well with Mr. Swensen at the helm:

After large declines since the Fed stole the Christmas rally, the majority of US index-tracking ETFs have moved back into oversold territory (more than 1 standard deviation below its 50-day moving average). NYC, ISI, QQQQ, MDY, IJR, IWM and IWC are currently the most oversold. The only two that are not oversold are the mega-cap DIA (tracks the Dow 30) and OEF (tracks the S&P 100) ETFs.

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For all the ETFs that put on the razzle-dazzle to the point of confusion, there are still plenty of transparent, obvious ETFs for the more dowdy index investors.

I agree with Matt Hougan's point on some of the newfangled ETFs. Sometimes investors have no idea what they're getting. Heck, WE have to dig around in prospecti and call up fund managers just to get some idea of what is in a fund, and this is what we DO for a living.

Hickey and Walters (Bespoke) submit: We have taken all the ETFs from our daily ETF Trend report and calculated their second quarter and year to date price performance. Not only is this a useful list of ETFs sorted by category (much like our popular ETF Cheat Sheets), but it also shows which areas have outperformed or underperformed in recent quarters.

Below we highlight index, style, dividend and other strategic ETFs. In the second quarter, QQQQ, DIA, NYC and OEF all outperformed the S&P 500 tracking SPY. Smallcap and midcap ETFs were up, but they underperformed their largecap brethren. Growth stock ETFs outperformed value stock ETFs, and many of the dividend ETFs were down or only up slightly in price.

Total Market ETFs
iShares Russell 3000 Index Fund (IWV)
iShares Dow Jones U.S. Total Market Index Fund (IYY)
iShares S&P 1500 Index Fund (ISI)
SPDR DJ Wilshire Total Market ETF (TMW)
Vanguard Total Stock Market ETF (VTI)

Roger Nusbaum submits: Over the weekend a reader left a question in which he quoted an article about benchmarking to the DJ Wilshire Global Total Market Index instead of the usual suspects like the S&P 500.

I flippantly asked if he had a ticker symbol, as some of these indices are difficult to follow and get information about. He came back with two symbols in the Yahoo Finance format: ^DWGT and ^DWG. These appear to be two separate indices. Yahoo, when I looked, did not have more than 5 days of chart info on either. Further, Yahoo Finance did not have any composition information.

Eddy Elfenbein submits: Wednesday, the Dow closed above 12,500 for the first time ever. But the Dow has actually been a laggard. If the Dow had merely kept pace with the Wilshire 5000 over the last four years, which is the broadest measure of the market, then the index would currently be over 14,300:

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Goldman, JPMorgan Split on Interest Rates, Investing Strategy [Bloomberg]