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Top-Rated Commodity ETFs That Beat Stocks

Exchange-traded funds that invest in commodities, particularly precious metals, are holding their own this year after being pounded in 2008. Inflation-fearing investors are turning to these funds as the economy fights its worst decline since the Great Depression.

The commodity ETFs below have earned top grades from TheStreet.com Ratings, and outperformed stocks during the past three months. The precious metals funds on the list have gone further, returning more than 20%. The S&P 500 has lost 14% since mid-December.

The bull market for commodities came crashing down last summer and fall. But gold prices have rebounded, rising 28% since early November, and declines among other commodities have leveled off.

Demand for materials has suffered as consumers spend less and businesses operate below capacity. While that doesn't seem like it would bode well for prices, the funds are drawing money from investors who worry that the trillions of dollars in government aid gushing into the economy will cause runaway inflation.

The precious-metals ETFs below have earned "overall grades" that amount to "buy" recommendations. Two PowerShares funds are rated A-plus, the highest mark.

With commodity prices still down sharply since the middle of last year, only two of the ETFs have "overall" grades in the C range, the equivalent of a "hold" opinion. The other three funds fall in the D category, which means "sell." The wide swings of commodity ETFs tends to hold back their overall ratings.

TheStreet.com Ratings uses a computerized model to evaluate a fund's performance and volatility, which is reflected in their "reward" and "risk" grades. Funds with the highest "overall" ratings have attained the best combination of the two.

Best-Rated "Store-of-Value" ETFs by TheStreet.com Ratings
NAME
TICKER
Reward Grade
Risk Grade
Overall Grade
3-Month Total Ret'n (%)
PRECIOUS METALS ETFs
PowerShares DB Gold Fund
DGL
A+
B
A+
22.64
PowerShares DB Precious Metals Fund
DBP
A
B-
A+
26.22
SPDR Gold Shares ETF
GLD
A+
C+
B+
23.85
iShares COMEX Gold Trust
IAU
A+
C+
B+
23.30
PowerShares DB Silver Fund
DBS
B+
C+
B-
39.40
COMMODITY ETFs
PowerShares DB Commodity Idx Track
DBC
C+
C+
C+
-3.22
PowerShares DB Agriculture Fund
DBA
C-
C+
C-
6.63
iPath DJ AIG Live Stk TR Sub-Index
COW
C-
D+
D
-5.50
GreenHaven Continuous Commodity
GCC
C-
D-
D-
4.25
iShares S&P GSCI Commodity-Indexed
GSG
E+
C-
D-
-11.34
THE U.S. STOCK MARKET
Vanguard Total Stock Market ETF
VTI
C
C+
C
-20.56
Source: TheStreet.com Ratings (Data as of end of most recent month).
For an explanation of our ratings, click here.
Richard Widows is a senior financial analyst for TheStreet.com Ratings. Prior to joining TheStreet.com, Widows was senior product manager for quantitative analytics at Thomson Financial. After receiving an M.B.A. from Santa Clara University in California, his career included development of investment information systems at data firms, including the Lipper division of Reuters. His international experience includes assignments in the U.K. and East Asia.

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