Investing News: 3X Leveraged ETFs Ready to Go

One of the more interesting investments available on the stock market is the exchange traded fund (ETF). ETFs are funds that trade like stocks. They are securities that track groups of stocks, commodities, currencies and other investments. ETFs can even track indexes (for instance, if you wanted an ETF to track the S&P 500, you could invest in SPY). You can also follow sectors, and currency ETFs are gaining in popularity. Not only are there bullish ETFs that gain when the components do, but there are bearish exchange traded funds that track downward movement. These investments are listed on stock tickers as stocks, and they trade as stocks -- with similar fees and commissions.

I'm not too into ETFs, since they can be risky and they are highly leveraged. I like the idea of clean energy ETFs to a certain extent (I do PBW), especially since the Obama victory, but exchange traded funds do not make up much of my portfolio. My risk tolerance just can't handle. But I know some investors who love them.

Highly leveraged ETFs

When 2x ETFs were introduced (that's 200% leveraged), many thought that was wild. Which is why eyebrows are raising all over the place that a generation of 3x EFTs is about to roll out from Direxion. In investing terms, a 3 to 1 relationship is HUGE. While it means the possibility of more money to be made, it also means that there is a possibility of more money to be lost.

While 3x ETFs don't appeal to me, it will be interesting to watch and see how they do. Inner8 tracks ETFs, and I will have to start following them and using that cool slider to share my opinion on them. ETFs really are about to get more interesting.

Morningstar offers more information on ETFs.