The number of companies rating exchange traded funds (ETFs) is growing and the methods used to rate them are multiplying, too. XTF LP is the latest addition to the ETF rating genre. David Hoffman of InvestmentNews reports through subsidiaries, XTF Advisers and XTF Capital,they build and market ETF portfolios.  But last month the company launched a free web-based ratings service. They rate ETFs on 16 metrics over two broad categories- investment metrics and structural integrity.

The other ratings systems available for ETFs include AltaVista, which looks at aggregate earnings growth, PE ratios and dividend yields.  Morningstar rates ETFs the same way they rate mutual funds, on their risk-adjusted performance.

Naturally, this rating trend is a response to the popularity and success of ETFs.  The rating services provide investors with more tools and information to make their investment decisions.  As with any tool, one must know the differences and how to apply the ratings to their own research.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.