Among them are the industry-specific SPDR S&P Aerospace & Defense (XAR) fund and the broader Industrial Select Sector SPDR (XLI) funds, which both are ranked overweight by S&P Capital IQ.
Vanguard has made significant strides in the ETF business in recent years with the launch of many new funds. It still has significantly less funds than the rest of the top four fund families, yet ranks third in the entire industry in assets under management.
And according to S&P Capital IQ, Vanguard has both the lowest average expense ratio (0.17%) and the highest percentage of funds with an overweight ranking among the four ETF providers it analyzed. The report spotlighted two of Vanguard's highest-rated funds--the Vanguard Russell 1000 Index ETF (VONE) and Vanguard S&P 500 (VOO).
The industry's fourth-largest provider, Invesco's PowerShares, has the second-most number of ETFs yet has about one-quarter of the assets held by number three Vanguard. That's partly because a number of its funds take a thematic approach that focuses on specific slices of the broader market, which inherently attracts fewer investors.
"They have a rules-based approach that appeals to some investors," Rosenbluth said, citing funds such as the PowerShares S&P 500 Low Volatility Portfolio (SPLV), which launched in May 2011, and the PowerShares International Dividend Achievers Portfolio (PID) funds--both rated as marketweight by S&P Capital IQ.
When it comes to ranking PowerShares ETFs, the report said, the provider has a
relatively high percentage of funds that've "earned negative inputs for Risk Considerations in our research, partially offset by neutral inputs for Performance Analytics."
All told, S&P Capital IQ ranks 667 equity ETFs. Among them, 25% have earned on overweight rating.
--Jeff Schlegel