Barclays Dominates List of Best-Rated ETFs

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Barclays(BCS Quote) dominates the list of the 25 best-rated exchange-traded funds on the strength of its fixed-income funds during the longest recession in more than half a century.

Twenty-one of the 25 most highly rated ETFs are owned by Barclays or track a Barclays index.

Barclays agreed to sell its iShares ETFs to CVC Capital Partners for $4.4 billion. The pending sale is bullish for Barclays in that the deal locks in a fair price while allowing the company to continue to shop iShares to other potential suitors until the acquisition closes. Also, if CVC successfully resells iShares, Barclays gets 20% of the increase in cash.

Barclays retains the revenue generated from the securities servicing for iShares, although State Street (STT Quote) and Bank of New York Mellon (BK Quote) have been cited as potential bidders on this business.

The three best-rated exchange-traded funds based on March 31 data are Market Vectors-Barclays AMT-Free Short Municipal ETF(SMB Quote), SPDR Barclays Capital Short Term Municipal Bond ETF(SHM Quote) and the iShares Barclays 10-20 Year Treasury Bond Fund(TLH Quote). In this time of financial uncertainty, the "buy"-rated fixed income ETFs listed below can be used to balance the overall risk in an investor's portfolio.

The only two non-fixed-income ETFs with top grades on the list are bullish currency plays. The PowerShares DB US Dollar Index Bullish Fund(UUP Quote) is a bet on the U.S. dollar against the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. The Market Vectors-Renminbi/USD ETN (CNY Quote) uses short-term forward contracts to benefit from a rise in China's currency in relation to the U.S. dollar.

Best-Rated Exchange Traded Funds Fund (Ticker) Overall Grade Reward Grade Risk Grade Objective Market Vectors Short Muni (SMB) A+ A+ B Municipal - National SPDR Barclays Cap Short Term Muni B (SHM) A+ A+ B+ Municipal - National iShares Barclays 10-20 Yr Treasury (TLH) A+ A+ B Government Bond iShares Barclays 3-7 Year Treasury (IEI) A+ A B+ Government Bond PowerShares DB US Dollar Bullish Fd (UUP) A+ A+ B Currency SPDR Barclays Cap Interm Term Trs E (ITE) A+ A B Government Bond iShares Barclays 1-3Yr Treasury Bd (SHY) A+ A B Government Bond iShares Barclays 7-10Yr Treasury Bd (IEF) A+ A+ B Government Bond PowerShares VRDO Tax-Free Weekly (PVI) A+ A- B+ Municipal - High Yield iShares Barclays MBS Bond Fd (MBB) A+ A B General Mortgage Market Vectors Interm Muni (ITM) A+ A+ B Municipal - National iShares Barclays Aggregate Bd (AGG) A+ A B General Bd - Investment Grade iShares Barclays Intrm Govt/Crdt Bd (GVI) A+ A- B General Bd - Investment Grade iShares Barclays Govt/Credit Bd (GBF) A+ A- B Government Bond iShares S&P National Municipal Bond (MUB) A+ A B Municipal - National SPDR Barclays Cap Muni Bond ETF (TFI) A+ A+ B Municipal - National iShares Barclays Short Treasury Bd (SHV) A+ B+ B+ Government Bond SPDR Barclays Cap Aggregate Bnd ETF (LAG) A+ A- B General Bd - Investment Grade iShares S&P CA Municipal Bond (CMF) A+ A+ B Municipal Single State Market Vectors Chinese Renminbi USD (CNY) A+ A B Currency Claymore US Cp Mkt Micro Trm Fx Inc (ULQ) A+ B+ B General Bd - Investment Grade Vanguard Short Term Bond ETF (BSV) A+ A- B General Bd - Investment Grade SPDR Barclays Cap 1-3 Month T-Bill (BIL) A+ B+ B Government Bond SPDR Barclays Cap CA Muni Bond ETF (CXA) A+ A B Municipal - National iShares Barclays TIPS Bond (TIP) A+ A B Government Bond Source: TheStreet.com Ratings

The grades can be interpreted as follows: A is "excellent" or "buy." B is "good" or "buy." C is "fair" or "hold." D is "weak" or "sell." And E is "very weak" or "sell." A plus or minus sign designates that a fund is in the top or bottom third of funds with the same letter grade.