Ratings initiated coverage of 15 exchange-traded funds that accrued a sufficient track record of risk and performance data by the end of December 2008.

Only one of the newly rated ETFs with inception dates during December 2007 received our top rating level of excellent.

Starting off with a rating of A+, the Market Vectors Lehman Brothers AMT-Free Intermediate Municipal ETF ( ITM) is the sole buy-rated fund of the bunch. The fund mirrors the Lehman Brothers AMT-Free Intermediate Continuous Municipal Index with an average of 10.8 years until maturity.

Not only does this municipal bond fund duck federal and some state and local taxes, but it is also designed to be free from alternative minimum tax requirements. As of Nov. 30, 2008, the fund's 30-day yield of 4.25% would be equivalent to 6.54% for wealthy investors in the 35% tax bracket. The 75 issues held were predominantly local, state, transportation, special tax, water, lease, power, education and hospital municipal bonds, with New York, California and Texas topping the list of debtor states.

At C+, just missing the cut for a buy rating, the Vanguard Extended Duration Treasury ETF ( EDV) spiked upward to a total one-year return of 54.51% in 2008. The fund is the exchange-traded version of the similarly named open-end fund topping our list of best-performing Vanguard funds in December.

Two of the funds listed below have nowhere to go but up in future ratings as we initiate coverage at our lowest possible rating of E-. PowerShares DWA Emerging Markets Technical Leaders Portfolio ( PIE), took a hit by following the Dorsey Wright Emerging Markets Technical Leaders Index to a loss of 62.76% in 2008.

Contributors include minus 84.2% from Yingli Green Energy ( YGE), minus 52.8% from Gerdau SA ( GGB) and minus 51.3% from Unibanco -- Uniao de Bancos Brasileiros SA ( UBB).

The fund is allocated to 29% China, 14.6% Mexico, 12.8% Indonesia, 10% Malaysia and 8.3% Brazil equities.

Research Methodology 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 or underperformed the market.

While there is no guarantee of future performance, these investment ratings provide a solid framework for making informed, timely investment decisions. The funds listed below have reached their one-year anniversary.

New Coverage of Exchange Traded Funds
Fund (Ticker) Initial Rating
Total Return 1 Year
Market Vectors - LB AMT-Free Intermediate Municipal ETF (ITM) A+
Municipal - National
iShares JPMorgan USD Emerging Markets Bond Fund (EMB) C+
Emerging Market Income
Vanguard Extended Duration Treasury ETF (EDV) C+
Government Bond
iShares MSCI Japan Small Cap Index Fund (SCJ) C-
Non-US Equity
Vanguard Mega Cap 300 Value ETF (MGV) D
Equity Income
iShares S&P Global Infrastructure Index Fund (IGF) D
Global Equity
Vanguard Mega Cap 300 ETF (MGC) D
Equity Income
PowerShares S&P 500 BuyWrite Portfolio (PBP) D-
Equity Income
iShares MSCI Kokusai Index Fund (TOK) D-
Global Equity
Vanguard Mega Cap 300 Growth ETF (MGK) D-
Growth - Domestic
iShares MSCI EAFE Small Cap Index Fund (SCZ) D-
Non-US Equity
PowerShares DWA Developed Markets Technical Leaders Portfolio (PIZ) E+
Non-US Equity
Claymore/AlphaShares China Real Estate ETF (TAO) E+
Growth & Income
PowerShares DWA Emerging Markets Technical Leaders Portfolio (PIE) E-
Emerging Market Equity
PowerShares FTSE RAFI International Real Estate Portfolio (PRY) E-
Growth & Income
Source: Bloomberg & Ratings

Funds rated A or B are considered buys 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 are sell.

For more information, check out an explanation of our ratings.
Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by, 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.