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Four of the seven latest exchange-traded funds to be graded by Ratings distinguish themselves by allocating the investment percentages of stocks in their portfolios using novel formulations. That's a likely indication that portfolio "weighting" methodologies now represent the latest frontiers in the ever-expanding ETF universe.

Virtually every square inch of the earth's real estate is covered in one way or another by at least one "country" or "regional" ETF. In addition, every conceivable permutation of investment style, market value classification and economic sector concentration is well represented by an ETF. Creative portfolio-weighting schemes, therefore, would represent likely paths of least resistance for maintaining the expansion of that investment genre's population growth.

A quartet of PowerShares internationally focused "FTSE RAFI" dominates the accompanying list of the seven ETFs most recently graded by Ratings. FTSE is a partnership of The Financial Times of the United Kingdom and the London Stock Exchange. It creates and maintains hundreds of market indices. Research Associates, a California company, created the methodologies for the new indices, which are tagged "fundamental index" (Financial Associates Fundamental Indices) weightings.

Market indices traditionally have been constructed by assigning every component stock in a gauge a "weighting" proportionate to the security's total market value. Thus, a stock with a large-market capitalization would influence the index more than a small-cap issue. In recent years, some so-called "equal weighted" ETFs were introduced that assigned every component of an index, such as the S&P 500, equal representation.

ETF management firm Wisdom Tree gained notoriety by weighting its funds according to dividends. Other managers tried different weighting structures. The newly graded PowerShares FTSE RAFI entries are weighted according to more complex algorithms that include factors such as revenue, cash flows, book values and dividends of the constituent corporations.

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