Vanguard, the No. 2 U.S. mutual fund manager with $747.7 billion under management in open-end funds we rate, doesn't have nearly the same presence in exchange traded funds. But with some $15.4 billion in rated ETF assets, it's still a big player in this much smaller but fast-growing market.

Each month TheStreet.com Ratings updates its risk-adjusted performance ratings on approximately 800 closed end funds and exchange traded funds. The Top 200 list is compiled monthly. As of Oct. 31, Vanguard had 12 on the list. Of the 23 Vanguard ETFs we rate, 15 are rated buy with investment grades of A+, A, A-, B+, B or B- and eight are rated hold, which corresponds to investment grades of C+, C, & C-.

As a group, the firm's income funds get the highest marks, with Vanguard Telecom Services ETF ( VOX) and Vanguard Consumer Discretionary ETF ( VCR), in particular, posting impressive performances recently.

It is no surprise that investors, seeing renewed interest in media buyouts and banking on a strong holiday shopping season, have bid up stocks held by Vanguard Consumer Discretionary above those held by another income fund, Vanguard Consumer Staples ETF ( VDC ).

In the three-month period noted below, Consumer Staples' largest holding, Procter & Gamble ( PG) climbed a respectable 11.9%, but the largest holding of Consumer Discretionary, Time Warner ( TWX), nearly doubled that performance at 22.1%.

Vanguard European Stock ETF ( VGK), which tracks the MSCI International Europe Index, is highly sensitive to the banking and oil and gas industries with stock holding concentrations of 18.4% and 11.0%, respectively. On a country basis, 31.7% of the holdings are British, 14.0% French and 10.6% Swiss, followed by 10.3% German.

Vanguard REIT Index ETF ( VNQ) has also performed very well the past three months, six months and one year, despite a marked slowdown in the housing sector. Our models show that real estate investment trusts in general seem to be continuing to profit from the income generating power of their properties, which are primarily in commercial, rather than residential, real estate.

Investors who are concerned about a possible slowdown in the U.S. economy next year may want to consider the Vanguard Utilities ETF ( VPU). The dividend yield offered by this sector makes it a good defensive play.


In the Vanguard
How the fund titan's ETF holdings shape up.
Click here for larger image.
Source: TheStreet.com Ratings

Sam Patel, CFA, is the manager of mutual fund Research for the TheStreet.com Ratings.

In keeping with TSC's Investment Policy, employees of TheStreet.com Ratings with access to pre-publication ratings data must pre-clear any potential trade through the legal department, and are prohibited from trading any security that is the subject of an unpublished rating revision until the second business day after the rating is published.

While Patel cannot provide investment advice or recommendations, he appreciates your feedback; click here to send him an email.

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