Most Improved ETFs Display Defensiveness

The two funds on a six-notch free fall are both tied to the U.S. dollar and predicted inflation/deflation levels. On Wednesday, the consumer price index for October came in 1% lower than September. Even more dramatic was October's 2.8% month-over-month reading in the producer price index released Tuesday. In deflation, it takes fewer dollars to buy the same amount of goods.

First, the CurrencyShares Mexican Peso Trust (FXM), which rises with the strength in the peso, careened six notches to a rating of C. At the peso's peak strength on Aug. 4, it took $101.44 to buy 1,000 pesos. By the end of October, the same 1,000 pesos could be purchased for just $77.97.

The other fund dropping six steps lower, PowerShares DB Gold Fund (DGL), is tied to the Deutsche Bank Liquid Commodity Index-Optimum Yield Gold Excess Return Index, which tracks the bullion price. Gold, priced in U.S. dollars, has been on a roller-coasterlike decline down to the $750 level since a peak on March 17 at $1,032.70 per ounce.

On a five-notch drop is the SPDR Barclays Capital TIPS ETF (IPE). Investors expecting deflation fled these inflation protected securities, leading to a new rating of C+ from A.

With each additional month of data, TheStreet.com Ratings updates its ranking scorecard, assigning new ratings to each fund. Below is the list of the five most-improved and five most-deteriorated exchange-traded funds from Sept. 30 to Oct. 31.

Largest Ratings Upgrades and Downgrades Fund (Ticker) Rating Previous Rating Objective Notches Moved PowerShares Dynamic Utilities (PUI) A- C Sector - Utilities 5 Up Vanguard Intermediate Term Bond ETF (BIV) B+ C General Bd - Investment Grade 4 Up PowerShares Aerospace & Defense (PPA) C+ D+ Equity Income 3 Up PowerShares Dynamic Enrg Exp & Prod (PXE) C D Sector - Energy/Natural Res 3 Up iShares S&P U.S.Preferred Stock Ind (PFF) D- E- Equity Income 3 Up SPDR Barclays Capital TIPS ETF (IPE) C+ A Government Bond -5 Down KBW Regional Banking ETF (KRE) C A- Sector - Financial Services -5 Down HealthShares Drug Disc Tools (HHV) C- B+ Sector - Health/Biotechnology -5 Down PowerShares DB Gold Fund (DGL) C A Sector - Precious Metals -6 Down CurrencyShares Mexican Peso Trust (FXM) C A Non-US Equity -6 Down Source: TheStreet.com Ratings

For more information, check out an explanation of our ratings.

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