TheStreet.com Ratings initiated coverage of 37 exchange-traded funds that accrued a sufficient track record of risk and performance data by the end of April 2008.
Two of the funds that opened for business as recently as April of 2007 received our top rating level of Excellent. Both of these are Vanguard exchange-traded funds invested in fixed income securities.
The combination of good grades on both risk and reward resulted in A ratings for the
Vanguard Intermediate Term Bond ETF
Vanguard Short Term Bond ETF
For these Vanguard funds, the intermediate term refers to U.S. government debt and investment grade corporate debt for American and foreign issuers in the five to 10 year maturity range. The short-term variant is limited to just one to five year maturities. Both funds track corresponding Lehman Brothers Government/Credit indices.
Of the 10 funds where coverage was initiated at the Hold level, the
SPDR S&P China ETF
stands out, with a one-year total return of 46.19%. Excessive volatility neutralized this impressive return, leading to the C rating.
New coverage in the Sell range includes the wide variety of HealthShares that I first wrote about back in
With an initial rating of E, investors in the
HealthShares Ophthalmology ETF
are seeing red after losing 40.20% in a year. Over the same period, the holdings providing the worst of the damage include
ISTA Pharmaceuticals Inc
, off 77.25%;
, off 75.12%;
TLC Vision Corp
, off 74.70%; and
Opko Health Inc
, off 65.21%.
Also, speculators expecting fat returns from the E- rated
HealthShares Metabolic-Endocrine Disorders ETF
ought to be roundly disappointed with a loss of 36.55%. The one-year loss of 89.61% from
, 82.12% loss in shares of
, and 72.18% drop in
contributed most to the investor account shrinkage.
TheStreet.com Ratings condenses the available fund performance and risk data into a single composite opinion of each fund's risk-adjusted performance. This allows the unbiased identification of those funds that have historically done well and those that have underperformed the market. While there is no guarantee of future performance, these investment ratings provide a solid framework for making informed, timely investment decisions.
Funds rated A or B are considered Buy rated, based on a track record of higher-than-average risk-adjusted performance. Funds at the C level are rated as Hold, while underperformers at the D and E levels our model ranks as Sell.
For an explanation of our ratings,
Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.