TheStreet.com Ratings: Picks for an ETF Portfolio

As the third quarter came to a close, investors were still enjoying the benefits of a bull market. But behind the scenes of the "Dow 12,000" hype, the reality is that groups of stocks are moving, not the whole market.

This presents an ideal opportunity for ETF investors who can follow trends.

Looking forward to the fourth quarter and 2007, we put together a portfolio of ETFs we like (the long portfolio) and one of those we expect to do poorly (the short portfolio) from a universe of the nearly 200 ETFs we rate.

Be ready for a few surprises.

But first, a caveat: These two portfolios do not aim for uncorrelated returns and are not intended to maximize aggregate unit performance up or down.

Rather than being specific recommendations, these are merely theoretical portfolios to help you make clearer decisions about your own investments. Our fund model calls for a conservative view of additional exposure to most U.S.-only sector-style ETFs.

To qualify for the long portfolio, the selected ETF had to have an overall score in the top 30th percentile.

The overall rating considers total return to shareholders, timeliness and low price volatility -- the three core factors in our ratings model.

We chose investment styles that our fund model says are working on the basis of the number of high ratings in the group and recent performance trends.

Here, then, are the ETFs that fit the long-portfolio profile and meet our investment criteria. On the next page I give you my reasoning for each fund's inclusion in this mock portfolio.

Best of the Best Exposure to international, energy and gold form the basis of the long portfolio
Style	Best ETF	Ticker	11/1/06 Price	Units	Amt	Rating
Non-US Equity	iShares MSCI Spain	EWP	$50.35	19	$956.65	A+
Sector - Precious Metals	streetTRACKS Gold Shares	GLD	61.36	16	981.76	B
Growth - Domestic	iShares Russell Mid Cap Value	IWS	140.62	7	984.34	A
Sector - Financial Services	iShares S&P Global Financials	IXG	86.06	11	946.66	A
Global Equity	iShares S&P Global Telecom	IXP	60.64	16	970.24	B+
Sector - Energy/ Natural Res	iShares Dow Jones US Energy	IYE	95.64	10	956.40	A+
Equity Income	iShares Morningstar Large Value	JKF	80.19	12	962.28	A+
Sector - Utilities	HOLDRS Utilities	UTH	130.10	7	910.70	A
Growth & Income	Vanguard REIT ETF	VNQ	75.75	13	984.75	A+
Emerging Market Equity	Vanguard Emerging Markets ETF	VWO	70.49	14	986.86	A+
Cash			1.00	359.36	359.36
				Total	$10,000.00
Source: TheStreet.com Ratings