In an effort to uncover today's most profitable ETFs, Nathan has developed a proprietary ETF rating system. This proprietary model incorporates his comprehensive research, analysis and market outlook, and it allows him to provide you with an easy-to-interpret letter grade for each and every ETF he profiles in The ETF Authority.

To determine this grade, he judges funds on a number of quantitative factors, including fees and expenses, volatility and risk-adjusted performance, relative returns, and tax efficiency, among other things. And to supplement this hard data, he adds his subjective, forward-looking assessment of a specific fund's outlook, based on relative strength, valuation and a host of other technical and fundamental criteria.

As the most important grading criterion, he assigns a fund's relative performance a score ranging from 1 (lowest) to 15 (highest). Each of the other five grading categories are worth five points. From that total, he determines a fund's grade as follows:

38 - 40 points -- A+
34 - 37 points -- A
31 - 33 points -- A-
28 - 30 points -- B+
26 - 27 points -- B
24 - 25 points -- B-
17 - 23 points -- C
14 - 16 points -- D
<13 points -- F

This grading methodology forms the foundation of Nathan Slaughter's ETF Authority newsletter, and needless to say, he focuses his research primarily on those select few funds that fall into the upper tiers of this scoring system.