Manager aims to educate investors and advisors on individual ETF components. Exchange-traded fund (ETF) manager XTF has debuted a new service to help private-client advisors and institutional investors assess ETFs in two broad categories through ratings of 16 metrics.

"The ETF market is growing so quickly that investors are fast becoming overwhelmed by the number of choices available," says Michael Woods, CEO of New York-based XTF. "Our goal is to help create a more educated ETF investor; one who understands what he or she is investing in and can make an intelligent choice for their portfolio and financial needs. This ratings service is an important step towards achieving that goal."

Seven

The ratings service system includes ETFs that have been trading for at least six months and "exhibit enough transparency so that XTF can research its fundamental factors, such as diversification, risk metrics and yield numbers -- the same criteria that XTF uses in constructing its portfolios," XTF says in a press release.

"The seven fundamental factors upon which we base an ETF's rating provide us a comprehensive view of how we believe the ETF will perform in the future," says XTF's CIO Jeff Buetow. "Because historical performance is generally uncorrelated to future performance, all but one of the metrics are forward-looking and strategically balanced in a way that allows for a full picture of the ETF's potential for performance."

The service is aimed at two primary audiences: financial advisors and institutional investors "who can take advantage of the array of structural integrity measures in order to best utilize ETF portfolios both for performance and hedging," according to XTF.

XTF adds that because it's an asset manger that chooses "only what it believes to be the best available products" rather than a sponsor it's "in a strong position to rate individual ETF products without bias."

The ETF rating service is accessible here.

XTF, which opened for business in September 2005, manages about $253 million, primarily for individuals with less than $1 million in investable assets. -FWR

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