TheStreet.com Ratings Initiates Coverage on Nine ETFs, Three Closed-End Funds

At an initial rating of A+, (excellent), the Vanguard Mid-Cap Growth Index Fund (VOT) tracked the Morgan Stanley Capital International US Mid Cap Growth Index for a one year total return of 21.26%. More than 98% of the ETF's holdings are U.S. equities, the largest being Precision Castparts (PCP), Nvidia (NVDA) and T Rowe Price (TROW).

The other "excellent" fund is the A-rated First Trust DB Strategic Value Index Fund (FDV), which follows the Deutsche Bank CROCI US+ Index. Aside from the 2.5% it allocates to Bermuda-listed stocks, the rest of its holdings are U.S. equities such as Johnson & Johnson (JNJ), Occidental Petroleum (OXY) and News Corp (NWS/A).

Four of the ETFs earned our lowest possible rating of E-, or "very weak". All have one thing in common: they all target an inverse return of twice their specified index. In other words, negative 200% of the benchmark's return. The S&P 500, S&P MidCap 400, Dow Jones Industrial Average and NASDAQ-100 Index are all up for the year ending August 31, 2007. Accordingly, ProShares Ultra Short S&P 500 (SDS) lost 16.41%, ProShares Ultra Short MidCap 400 (MZZ) sank 19.48%, ProShares Ultra Short Dow 30 (DXD) was slashed by 22.44% and ProShares Ultra Short QQQ (QID) was chopped down by 32.66%.

A protracted bear market is not likely, so these funds should continue to be laggards.