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.