The broad market rally that began March was initially led by small-caps, but a shift has given  large-caps a place in the spotlight. What happened?

• Donna Kardos Yesalavich for The Wall Street Journal reports that small-caps were hit the hardest on the way down, because of the perception they are risky, given their lower liquidity, lack of international exposure and higher trading volatility. (Reasons why both large and small-cap ETFs can round out a portfolio). As a result, small-caps got so cheap that investors snapped them up in droves. The interest drove prices back up to their highest valuations since 1996, putting large-caps back in favor.

• Large-caps may also get a boost from their stability, something investors are still seeking as the markets recover. (Read about the small cap ETF rally here). As a result of the shift, John Spence for The Wall Street Journal notes that the iShares Russell 2000 Index Fund (NYSEArca: IWM) saw $1 billion in outflows in October. It brought in $2.2 billion in the previous three months.

• Profits for smaller companies are also expected to be slower in the fourth quarter, reports Lynn Thomasson and Sapna Maheshwari for Bloomberg. Earnings from small companies are projected to increase 38%, about half as fast as S&P 500 income. (Ways to play a large-cap rally.)

For more stories about asset class ETFs, visit our asset class category.

• SPDR S&P 500 (NYSEArca: SPY): up 23.6% year-to-date

• S&P 500 Growth (NYSEArca: IVW): up 28.3% year-to-date

• S&P Small Cap 600 (NYSEArca: IJR): up 17.7% year-to-date

• S&P Small Cap 600 Growth (NYSEArca: IJT): up 20.2% year-to-date

As the name might imply, revenue is the end-all, be-all in RevenueShares ETFs. Most ETFs weigh holdings by market capitalization, but RevenueShares weighs stocks based on sales, reports Alexandra Zendrian of Forbes.  Its funds are rebalanced once each year on Sept. 30, because quarterly rebalancing could lead to too many fluctuations.

Why revenues? Because it’s a number that’s difficult to fudge.

Dividends can be adjusted, earnings can be moved around by taking writeoffs and doing fancy accounting. The provider feels that revenues are simply a more consistent number to look at.

Another reason the provider has gone with revenues is because all companies have a revenue.

The provider says all of its funds are beating their underlying indexes year-to-date, RevenueShares Small Cap Fund (NYSEArca: RWJ) being the best performer. (More on revenue-weighted ETFs).

For more stories on asset class ETFs, visit our asset class ETF category.

Some of RevenueShares ETFs include:

• RevenueShares Large Cap Fund (NYSEArca: RWL): up 26.3% year-to-date

• RevenueShares Mid Cap Fund (NYSEArca: RWK): up 44% year-to-date

• RevenueShares Small Cap Fund (NYSEArca: RWJ): up 36.7% year-to-date

Kevin Grewal contributed to this article.

Emerging Global Shares has filed to launch a group of ETFs aimed squarely at the BRIC economies, according to Cinthia Murphy for Index Universe:

Emerging Global Shares INDXX India Infrastructure Index Fund

• Emerging Global Shares INDXX India Infrastructure Index Fund
• Emerging Global Shares INDXX China Infrastructure Index Fund
• Emerging Global Shares INDXX Brazil Infrastructure Index Fund
• Emerging Global Shares INDXX India Mid Cap Index Fund
• Emerging Global Shares INDXX China Mid Cap Index Fund
• Emerging Global Shares INDXX Brazil Mid Cap Index Fund
• Emerging Global Shares INDXX Growing Asia Large Cap Index Fund

Every single company within these funds will have no more than a 10% weighting. Net operating expenses are pegged at 0.85% for each fund. ALPS Advisors is the advisor for each fund, with Emerging Global Advisors LLC the subadvisor. (Read about the widening wealth shift between the United States and emerging markets).

Each fund will invest in securities, ADRs and GDRs of various companies to replicate their respective indexes. A fully replicating strategy will be used to assemble the funds, however, representative sampling may be used, if needed. (The ultimate guide to the BRIC ETFs). You can read the prospectus for the funds here.

The BRIC economies have been standouts this year as the world recovers from the global financial crisis, gaining about 110% since the market’s low. Russia has been one of the strongest, gaining 137% year-to-date. Brazil has gained 117%, China is up about 60% and India has added about 90%.

For more stories about BRIC ETFs, visit our BRIC category.

Warren Buffett’s company Berkshire Hathaway (NYSE: BRK-A) announced this week that it plans to buy Burlington Northern Santa Fe (NYSE: BNI) for $100 a share, writes Jack Hough for SmartMoney. Buffett named rail car loadings as his favorite economic indicator.

• iShares Dow Jones Transportation Average (NYSEArca: IYT): up 7.2% year-to-date ; BNI is 11.4%

According to records, Berkshire Hathaway sold shares of Moody’s (NYSE: MCO) after the ratings firm signed off on mortgage securities that turned toxic. During the second quarter, Berkshire dumped Constellation Energy (NYSE: CEG) and reduced holdings in ConocoPhillips (NYSE: COP), Home Depot (NYSE: HD) and United Health Group (NYSE: UNH). The money was used to purchase preferred shares of General Electric (NYSE: GE) and Harley Davidson (NYSE: HOG).

• Vanguard Industrials ETF (NYSEArca: VIS): up 12.5% year-to-date; GE is 12.5%

• First Trust Large Cap Value Opp AlphaDEX (NYSEArca: FTA): up 28.5% year-to-date; HOG is 1%

Berkshire also bought two common stocks that are more widely available: Becton Dickinson (NYSE: BDX), distributor of medical supplies,  and Johnson & Johnson (NYSE: JNJ), maker of drugs, consumer products and medical supplies. Value investors should noted that both BDX and JNJ have increased dividends each year for more than three decades. (How healthcare overhaul affects ETFs)

• iShares Dow Jones U.S. Healthcare (NYSEArca: IYH): up 10.3% year-to-date; BDX is 1.2%

• Pharmaceutical HOLDRs (AMEX: PPH): up 3.5% year-to-date; JNJ is 25.2%

Max Chen contributed to this article.

Peter Crawford, senior vice president of IMS Client Solutions, says the lack of commission is neither a gimmick, nor a temporary promotion. “We think this is an offer that is yet another example of Schwab challenging the status quo in the industry.”

On top of that, Schwab is tacking on competitive fees for its funds. The fees for its first eight ETFs are mostly lower than those of competing funds. Crawford says that the low fees and commission-free trading should appeal to investors of all types. (Why Schwab’s launch could open doors).

“Whether you’re self-directed or buy-and-hold, trading is unlimited. There’s no cap on size, there’s no minimum,” Crawford says. Commission-free online trading is available to all individual investors at Schwab, the 6,000 independent investment advisor firms who use Schwab and in Schwab retirement accounts that permit trading of ETFs.

The first four of Schwab’s eight ETFs will begin trading tomorrow morning:

• Schwab U.S. Broad Stock Market (NYSEArca: SCHB), 0.08% expense ratio
• Schwab U.S. Large-Cap (NYSEArca: SCHX), 0.08% expense ratio
• Schwab U.S. Small-Cap (NYSEArca: SCHA), 0.15% expense ratio
• Schwab International Equity (NYSEArca: SCHF), 0.15% expense ratio

In December, Schwab will launch four more funds:

• Schwab U.S. Large-Cap Growth (NYSEArca: SCHG), 0.15% expense ratio
• Schwab U.S. Large-Cap Value (NYSEArca: SCHV), 0.15% expense ratio
• Schwab International Small-Cap Equity (NYSEArca: SCHC), 0.35% expense ratio
• Schwab Emerging Markets Equity (NYSEArca: SCHE), 0.35% expense ratio

Charles Schwab, whom Crawford knows personally, is very bullish on the ETF industry. “He’s fired up about ETFs. He’s an ETF investor himself.”

The firm anticipates that as more of the money currently sitting on the sidelines is redeployed back into the markets, a good portion of it will be allocated to ETFs. Studies have shown that advisors are also increasing their awareness of the funds and 38% of them plan to invest more in ETFs in the coming year.

For more stories about the latest ETF launches, visit our new ETF category.

Claymore

Claymore/AlphaShares China All-Cap ETF (NYSEArca: YAO) is the third China-focused ETF from Claymore. Claymore President Christian Magoon says the new fund is different in several ways:

• It gives diversified exposure to a range of asset classes in the country.
• There’s exposure to the growing consumer sector of the country. China has a rapidly rising standard of living, and there’s still a lot of room to grow. Consumer spending makes about about 37% of China’s GDP. (Read about the U.S. push into emerging markets).
• There’s also exposure to technology in the fund. China is one of the most dynamic technology countries.
• It helps tackle a problem of large-caps in China. Namely, many of them are state-run entities than tend to be operated in the best interests of China rather than the investor. The fund has 57% exposure to large-cap, 33% mid-cap and 10% small-cap. By having more mid- and small-cap exposure, Magoon says, “You get a lot more of the entrepreneurial power of China as a culture.”
• A range of sectors are represented: financial, technology, utilities, telecom, consumer. “It’s one-stop exposure to China,” Magoon says. (Read more about China’s economy).
• One of the most well-known names in investing was behind its creation. Burton Malkiel, chief investment officer of AlphaShares and Princeton University economist, helped create the index. “He’s done lots of research on China, his passion is China. We worked together and created this index,” Magoon says.
• It has limits. YAO has a 35% limit on sector exposure, and no component receives more than a 5% weighting.
• It has a variety of share types. YAO isn’t just composed of American Depository Receipts (ADRs). There are also Global Depository Receipts (GDRs) and H Shares. A and B shares have been excluded because of limits on foreign ownership.

YAO joins two other China ETFs already available: Claymore/AlphaShares China Small-Cap (NYSEArca: HAO) and Claymore/AlphaShares China Real Estate (NYSEArca: TAO). Claymore has also filed for other China-based ETFs aimed at the consumer, technology and infrastructure sectors. (Read more about China’s real estate).

“We really believe that people are continuing to evolve when they look at China and not seeing it as a place where there’s just one way to invest,” says Magoon.

Meanwhile, Claymore’s merger with Guggenheim closed on Thursday. Magoon says they’re looking forward to working with the institutional investor and leveraging their research. “For now, we’re just starting out on our journey. It’s really going to be a growth story.”

For more stories on new ETFs, visit our new ETF category.

Heather Hayes contributed to this article.

Investors looking for dividend-paying stocks will encounter the argument that “growth” stocks may be better than those paying dividends, remarks John Jagerson for Learning Markets. (Read about how dividends can help).

Dividend-paying stocks, however, have usually outperformed major growth indexes as a result of lower volatility returns. For example, the Dow Jones Select Dividend Index has outperformed the S&P 500 and the Russell 2000 by almost 100% in the last 10 years.

Jagerson commented that an investor does not need to decide on a dividend-paying portfolio over a growth-oriented portfolio. A reasonable alternative may be a combination of the two.

You could take the time to scrounge up individual stocks that pay dividends, but you may also consider ETFs as an easy way to gain exposure to dividend-paying stocks. (Read about strategies to rebuild your portfolio).

For more information on dividends, visit our dividend category.

• SPDR S&P Dividend ETF (NYSEArca: SDY): up 16.4% year-to-date; yields 4.27%

• WisdomTree LargeCap Dividend (NYSEArca: DLN): up 15.8% year-to-date; yields 2.94%

• iShares Dow Jones Select Dividend Index (NYSEArca: DVY): up 7.1% year-to-date; yields 4.32%

Max Chen contributed to this article.

Grail Advisors is giving traditional mutual funds a run for their money, with the launch of  a new line of actively managed ETFs. New York-based RiverPark Advisors, assisted by Wedgewood Partners, will do the day-to-day stock selection. RiverPark’s involvement is notable because the firm’s principals are veterans of the traditional mutual-fund industry, hailing from Baron Funds, explains Eleanore Laise for The Wall Street Journal.

The new ETFs are:

• RP Growth (NYSEArca: RPX)
  
• RP Focused Large Cap Growth (NYSEArca: RWG)
• RP Technology (NYSEArca: RPQ)
• RP Financials (NYSEArca: RFF)

A actively managed ETF can offer many benefits to investors such as tax efficiency, lower costs, and full disclosure of what the fund owns, at any time of day. Garnering assets for the actively managed ETFs has proved to  be tough, however, as the market conditions and lack of investor education may be contributing, reports Joe Morris of Ignites. Nonetheless, Grail is planning to roll out 24-30 actively managed ETFs over the next year or so.

For more stories about New ETFs, visit our new ETF category.

SPDRs S&P 500 (NYSEArca: SPY), currently up 15.6% year-to-date, with average daily trading volume of 189 million, corresponds to the price and yield performance of the S&P 500 Index. The fund has a net expense ratio of 0.09%.

Sector allocations: information technology, 18.6%, financials, 15.2%, health care, 13.1%, energy, 11.7%, consumer staples, 11.6%, industrials, 10.2%, consumer discretionary, 9.2%, utilities, 3.7%, materials, 3.5%, telecom services, 3.2%

PowerShares QQQ (NasdaqGM: QQQQ), currently up 38.4% year-to-date, with daily average trading volume of 133 million, seeks to track the Nasdaq-100 Index. The fund consists of all stocks in the Index, which includes 100 of the largest domestic and international nonfinancial companies. QQQQ has an expense ratio of 0.2%.

Sector allocations: consumer discretionary 13.3%, consumer staples 1.1%, health care 16.3%, industrials 4.9%, info. tech. 63.1%, materials 0.6%, telecom services 0.8%

Financial Select Sector SPDR (NYSEArca: XLF), currently up 16.1% year-to-date, with average daily trading volume of 112 mil, tries to reflect the returns and characteristics of the Financial Select Sector Index.  The fund has an expense ratio of 0.21%. Top holdings include JP Morgan (NYSE: JPM) and Bank of America (NYSE: BAC).

iShares Russell 2000 Index (NYSEArca: IWM), currently up 19.8% year-to-date, with average daily trading volume of 72 million, tries to mimic results that correspond to the price and yield performance, before fees and expenses, of small capitalization sector of the U.S. equity market, Russell 2000 Index, which represents around 2,000 smallest companies in the Russell 3000 Index. The fund has an expense ratio of 0.24%.

Sector allocations: financial services, 20.5%, consumer discretionary, 16.8%, technology, 15.8%, health care, 15%, materials & processing, 8.2%, producer durables, 8.1%, utilities, 5%, other energy, 3.9%, autos & transportation, 3.5%, consumer staples, 2.6%

UltraShort QQQ ProShares (NYSEArca: QID), currently down 9.2% in the last month, with daily average trading volume of 36 million, seeks daily investment results that tracks twice the inverse of the daily performance of the NASDAQ-100 Index. Note the ETF tries to reflect a -200% return of the Index for a single day. The fund has an expense ratio of 0.95%.

Max Chen contributed to this article.

The new ETFs began trading on the NYSE Arca platform, expanding the domestic equity market. The funds seek to provide targeted access to the largest companies within the large-cap equity asset class, according to the announcement.

The new ETFs are:

• iShares Russell Top 200 Value (NYSEArca: IWX)
• iShares Russell Top 200 Index (NYSEArca: IWL)
• iShares Russell Top 200 Growth Index (NYSEArca: IWY)

The Russell Top 200 Index is a subset of the Russell 1000 Index and includes approximately 200 of the largest securities based on a combination of their market cap and current index membership, which is about 65% of the U.S. market.

ETF Guide reports that so far in 2009, large-caps have lagged behind the broader market, as small- and mid-size companies have dominated investor interest. As the risk appetite for investors begins to liven up, however, the large-cap market should regain the spotlight.

For more stories about large caps, visit our large-cap category.