Few New Funds Get 'Buy' Recommendation

TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.

Only three of 26 newly rated equity funds received "buy" recommendations from TheStreet.com Ratings.

The funds, listed in the accompanying table, sport steady strategies and conservative investments.

The Federated Target ETF 2015(FTOAX Quote) earned a B-plus grade from TheStreet.com Ratings by investing in a sensible mix of low-expense exchange traded funds, with its biggest holding the broadly diversified iShares S&P 500 Index ETF(IVV Quote). With an expense ratio of 0.75%, it doesn't burden holders with excessive management costs.

The ING Lifestyle Moderate Portfolio Fund(ILMAX Quote) is a B-plus rated fund of funds with about equal percentages of equity and fixed-income holdings.

Finally, the Vanguard Dividend Appreciation Index Fund(VDAIX Quote) earned its grade of B by tracking the Mergent Dividend Achievers Select Index. With a thin expense ratio of 0.4%, its largest holdings include mainstays such as Wal-Mart(WMT Quote), Procter & Gamble(PG Quote), Johnson & Johnson(JNJ Quote) and Exxon Mobil(XOM Quote).

The four members of the ProFunds group on the list -- three of which have the worst possible grade of E-minus -- provide a lesson in the perils of leveraged mutual funds.

ProFunds-Ultra Emerging Markets(UUPIX Quote) aims for a daily return of double the percentage change in the Bank of New York Emerging Markets 50 ADR Index. ProFunds Ultra Short Emerging Markets(UVPIX Quote) endeavors to produce a daily return of twice the amplitude of the opposite of the same gauge. So it might be expected that over time, one should be up and the other down. Yet both are down over the past 12 months and each has suffered sizeable losses over the past three years.

For the "mirror image" ProFunds Ultra International Fund(UNPIX Quote) and the ProFunds-Ultra Short International(UXPIX Quote), both have fallen this year and over the past three years, even though they track, respectively, double the long and short sides of the MSCI EAFE Index.