7 Newly Rated ETFs Offer Slim Pickings

NEW YORK ( TheStreet Ratings) -- TheStreet Ratings has initiated coverage of seven exchange-traded funds, or ETFs, that accrued a sufficient track record of risk and performance data by the end of October 2011.

None of these seven newly rated exchange-traded funds start out in the 'Buy' range. Only one begins at 'Hold' while six earned initial grades in the 'Sell' range.

The one newly rated fund that opened for business October 2010 received our highest possible 'Hold' rating of C+, or fair. The exchange-traded fund, ETFS Physical Precious Metals Basket Shares ( GLTR), returned 21.2% in the last year, beating all other newly rated ETFs on a risk-adjusted return basis.

The ETFS Physical Precious Metals Basket Shares seeks to reflect the performance of the price of physical gold, silver, platinum and palladium bullion in the proportions held by the Trust, less the expenses of the Trust's operations. Currently, each 50,000 share unit is worth a basket of 1491 oz of gold, 54,655 oz of silver, 199 oz of platinum, and 298 oz of palladium. The fund's ticker symbol is appropriately pronounced as glitter.

The second best newly rated ETF ranks at the top of the 'Sell' range. Losing just 6.2% in a year, the Cambria Global Tactical ETF ( GTAA) earned a grade of D+ by seeking to preserve and grow capital from investments in the U.S. and foreign equity, fixed income, commodity and currency markets, independent of market direction with the absolute return goal of reduced volatility, risk, and drawdowns.

The Cambria Global Tactical ETF invests in other ETFs allocated to 74% U.S. fixed income, 6% U.S. stocks, 6% currencies, 5% commodities, and 2% international fixed income. Top holdings include 12.4% in PIMCO Enhanced Short Maturity Strategy Fund ( MINT), 12.32% in Vanguard Total Bond Market ETF ( BND) and 12.2% in Vanguard Short-Term Bond ETF ( BSV).

The only other newly rated ETF with a positive first-year performance, Credit Suisse Merger Arbitrage Index ETN ( CSMA), returned 1.9% with an initial grade of D. The fund seeks to employ the merger arbitrage strategy by using a quantitative methodology to track a dynamic basket of securities held as long or short positions and cash weighted in accordance with the index rules to reflect publicly announced merger transactions that meet certain qualifying conditions.

Four newly rated ETFs in the 'Sell' range turned in double digit losses for their first-year performance. Market Vectors China ETF ( PEK), down 21.8%, starts at D-. JPMorgan Double Short US 10 Year Treasury Futures ETN ( DSXJ), off 12.8%, earns an E+. Market Vectors Rare Earth/Strategic Metals ETF ( REMX), losing 13.6%, gets an E+. And, JPMorgan Double Short US Long Bond Treasury Futures ETN ( DSTJ), falling 23.6%, ranks at a rating of E.

Research Methodology

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. The funds listed below have reached their one year anniversary.

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."

-- Reported by Kevin Baker in Jupiter, Fla.

For additional Investment Research check out our Ratings Research Center.
Kevin Baker became the senior financial analyst for TheStreet Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering equity and mutual fund ratings. 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.

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