Thirty-two exchange traded funds, or ETFs, jumped more than 15% yesterday as stock markets rose the most since October. After setting aside 18 leveraged funds with one-day returns as high as 41%, there were 14 ETFs that benefited the most from Monday's rally, spurred by an Obama administration plan to use public-private partnerships to clean up banks' balance sheets. Seven of the exchange traded funds focus on the financial sector. The best-performing, non-leveraged ETF on Monday was the Regional Bank HOLDRS Trust ( RKH), up 21% on large holdings of JPMorgan Chase ( JPM), Wells Fargo ( WFC), US Bancorp ( USB) and Bank of New York Mellon ( BK). The SPDR KBW Bank ETF did nearly as well, at 19%, driven by Bank of America ( BAC) and Citigroup ( C). The third-best financial ETF, PowerShares FTSE RAFI Financials Sector Portfolio ( PRFF), has insurance as its second-largest concentration of holdings, with names such as Berkshire Hathaway ( BRK.B) and Traveler Cos ( TRV). Of the remaining funds, five hold equity securities of real estate investment trusts. None performed better than DJ Wilshire REIT ETF ( RWR), up 17%. If the plan restores bank lending, then REITS such as Wilshire holdings of Simon Property ( SPG) and Public Storage ( PSA) and others may have an easier time financing real-estate deals. TheStreet.com Ratings' quantitative model condenses all available fund data into a single composite opinion of risk-adjusted performance. There are also "reward" and "risk" grades. The column of performance ratings, listed as "Reward Grade" in the accompanying table, is based on an evaluation of a fund's performance for a number of time periods, up to three years. More weight is given in the calculations to more recent intervals. The incremental effect of Monday's gains will be registered by the model at month-end.
In determining TheStreet.com Ratings' "risk" grades, the model evaluates volatility measures such as standard deviation of returns and a metric known as "drawdown," which gauges a fund's most severe period of loss over time. Because all funds carry some degree of risk, no stock funds receive "risk" grades in the A range.