10 Newly Rated Funds From TheStreet.com Ratings

TheStreet.com Ratings has initiated coverage of 10 open-end fixed-income funds that accrued a track record of three years of risk and performance data by the end of November.

The four funds that opened for business in November 2004 received our top rating level of A+, or Excellent. One other fund in the buy-rated group earned a rating of B+. All of these are money markets offered by Columbia Funds. Each one steadily increased over the review period.

The best of these, Columbia Massachusetts Municipal Reserves Fund (GMAXX Quote), is targeted to Massachusetts residents seeking to avoid state and federal income tax with a portfolio of Massachusetts municipal securities.

The second best-rated among the new coverage, Columbia New York Tax Exempt Reserves(CYAXX Quote), also ducks the tax collector for New York residents. Columbia Connecticut Municipal Reserves Fund (GCNXX Quote) does the same for citizens of Connecticut.

While the funds at the top of the list succeeded in minimizing risk, those at the bottom sought it out. Two high-yield corporate bond funds earned initial ratings of E, or Sell, after taking large fourth-quarter losses amid investor flight to safety.

Plummeting 27.26% for the 12 months ending November 2008 and averaging a loss of 7.08% over the last three years, the Fifth Third High Yield Bond Fund (FTYAX Quote) portfolio of non-investment grade corporate debt securities suffered in the liquidity crisis.

Even credit-worthy companies are having a hard time borrowing new money. In this recession, riskier companies may not be able to keep up with coupon payments or sell new debt in order to roll forward existing high-yield bonds coming due and defaulting on promised principal repayment.