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Charles Schwab & Co. affiliate Windhaven Investment Management, which runs $18 billion in funds of funds strategies primarily using index exchange-traded funds, disclosed its current market positioning to CNBC at's Inside ETFs Conference in Hollywood, Fla.

The highlights: staying away from emerging markets, focusing on short-term bonds and believing that the U.S. stock market is still the best bet for equity profits right now.

"We love emerging markets long term, but in the short term there are real headwinds," said Windhaven Chief Investment Officer Steve Cucchiaro. "No one knows how the China credit bubble will unwind.

"China keeps me up at night" he said later in his interview with CNBC's Bob Pisani.

Windhaven's equities portfolio is 17 percent U.S. stocks, 4 percent international developed market stocks and 3 percent emerging markets.

(Read more: Emerging markets ETFs: How to profit)

The ETF funds of funds manager hasn't bailed out of bonds entirely, as some investors have been doing in the Fed tapering environment. Windhaven has a 20 percent allocation to short-term bonds, 3 percent in U.S. Treasury inflation-protected securities, 3 percent in 10-year Treasurys and 3 percent in Asian bonds.

"After 31 years of falling interest rates, long-term bonds lose money as rates go up," Cucchiaro said. "But you can't get rid of all bonds because in a recession or deflationary environment, that's what really counts."

(Read more: 3 big ETF risks, 3 big ETF opportunities)

And even after gold's big fall last year, Windhaven continues to have faith in the hard asset, with gold representing 4 percent of the firm's portfolio. It also has a 4 percent weighting in commodities (energy), and 2 percent in cash.

"Stocks and bonds did bad in the '70s, but hard assets did well," Cucchiaro said.

The manager also has 4 percent in real estate—2 percent each international and U.S.

(Read more: Using dividend ETFs in a panicky market)

An interesting reveal is Windhaven's tactical bets—the best equity bets right now—and a play still predicated on the past few years of stimulus in developed markets.

Windhaven's tactical portfolio is 15 percent in U.S. stocks, 6 percent each in Japanese stocks and German stocks, and 3 percent each in U.K. stocks and cash.

"The enormous stimulus programs have been feeding the market, first the U.S. and then Japan and then Europe—that's where the opportunities have been," Cucchiaro said.

By Eric Rosenbaum,