As exchange-traded funds have gained in popularity, confusion has grown over how to pick the ETF right for investor portfolios. Now Charles Schwab has stepped up to fill in the gap.

On Wednesday, Charles Schwab announced it released a new tool to help guide investors on choosing the right ETFs for their specific portfolio needs. The quarterly Schwab ETF Select List was created by Charles Schwab Investment Advisory, Inc. and is a filtered list of all of the ETFs in the marketplace, highlighting pre-screened, low-cost funds. Schwab used quantitative and qualitative screens to filter each ETF and build the list, covering approximately 50 asset categories. All ETFs, including Schwab ETFs, are evaluated using the same criteria and broken into sectors for domestic stocks, international stocks, bonds, real estate and commodities.

“The Select List is designed to make it easier for investors who want help narrowing their choices to find the ETFs that are right for them,” said Beth Flynn, vice president of ETF platform development at Charles Schwab & Co., Inc., in a statement.

When selecting funds for the list, Schwab looked at variables such as total annualized cost of ownership, risk, fund structure and fit within a given category, in addition to narrowness of index, tracking error, bid/ask volatility and due diligence. The list excludes exchange-traded notes (ETNs), inverse or leveraged ETFs, actively managed ETFs, and unmanaged baskets of securities, Schwab said.

“With a thousand ETFs now available and more coming out weekly, investors tell us that selecting an ETF can be an overwhelming experience,” said Beth Flynn, vice president of ETF platform development at Charles Schwab & Co., Inc., in a statement. “Our goal is to help our clients make informed choices about these increasingly popular investment vehicles.”

According to Schwab, retail investor ETF assets jumped 61% in 2010 and account for 37% of the total ETF assets custodied at Schwab. Retail traders account for 12% of ETF assets. Independent RIAs accounted for 51% of ETF assets at Schwab at the end of 2010. ETF assets overall soared 34% at Schwab to $111 billion at the end of 2010, according to the company.

Schwab recently reported that ETFs remain advisors’ investment vehicle of choice, with 84% of RIAs participating in Schwab’s semi-annual Independent Advisor Outlook Study saying they currently use ETFs, with 31% indicating they plan to invest more in ETFs during the next six months. Advisors said that ETFs are their top choices for client portfolios because of diversification, utility in maintaining market exposure while making portfolio adjustments, and managing risk.