Exchange traded funds or ETFs have become wildly popular on Wall Street. There are ETFs tied to an index like the NASDAQ or the Dow Jones, sector-based ETFs, funds that focus on a specific or country or region of the world, even inverse ETFs that go up when the market goes down.

One flavor that has really come into favor recently is the leveraged ETF – or sometimes called 2X or 3X ETFs. These are funds that move exponentially with the market.  But while these leveraged ETFs can deliver huge returns when Wall Street moves in the right direction, they can do serious damage to your nest egg when the tables are turned. Remember that a leveraged fund that is on top of the market leaderboards one week could very well be on the list of the biggest losers when the winds change.

But if you have the stomach for the risk of leveraged ETFs, there is a lot of money to be made. Here are a few places to look if you want to spice up your portfolio with some of these funds:

Direxion Leveraged ETFs

Direxion offers a number of leveraged ETFs with names that tell you exactly what the fund is banking on. The Direxion Financial Bear 3X ETF (FAZ), for instance, is making a triple leveraged bet that financials will flop. On the other hand, the Direxion Large Cap Bull 3X ETF (BGU) is banking on a surge in blue chip stocks.

Direxion allows you to play wide swaths of the market, such as small-cap or large-cap stocks, or individual sectors such as financials. Here are some of the more popular Direxion ETFs:

• Direxion Financial Bear 3X ETF (FAZ)  
• Direxion Financial Bull 3X ETF (FAS)  
• Direxion Small Cap Bear 3X ETF (TZA)  
• Direxion Small Cap Bull 3X ETF (TNA)  
• Direxion Large Cap Bull 3X ETF (BGU)  
• Direxion Large Cap Bear 3X ETF (BGZ)  

Proshares Leveraged ETFs

ProShares also offers a number of leveraged ETFs. Like Direxion’s funds, the ProShares UltraPro family of ETFs all have fairly self explanatory names – except that the group of funds don’t specifically say that they’re leveraged three times. You just have to remember that anything that’s “Ultra” is a 2X leveraged ETF, and anything that’s “UltraPro” is leveraged three times.

For instance, if you want to buy and ETF that’s betting on a drop in the Dow, your ProShares options include the ProShares Short Dow 30 (DOG), which allows you to play 100% of the inverse in the Dow, or the Proshares UltraPro Short Dow30 (SDOW), which is leveraged three times and gives you 300% the inverse of the Dow.

Make sure you pay attention to this distinction before buying into a ProShares ETF. Some of the more popular varieties:

• ProShares UltraPro Dow30 (UDOW)
• ProShares Ultra Financials (UYG)
• ProShares Ultra Consumer Goods (UGE)
• ProShares Ultra Technology (ROM)
• ProShares UltraPro Short Dow30 (SDOW)
• ProShares UltraShort Oil & Gas (DUG)
• ProShares Ultra Health Care (RXL)
• ProShares Ultra Dow30 (DDM)

Rydex Leveraged ETFs

Rydex is another Leveraged ETF resource for investors looking to play the upside or downside of a specific sector or index. The S&P and Russell 2000 are both reflected in Rydex fund offerings.

But as you can see from the previous two providers, Rydex overlaps with a lot of other ETFs that are out there so make sure you do your research to make sure you’re picking the right fund even if it has the same sector in the name. The Rydex 2x S&P Select Sector Financial ETF (RFL), for example, and the twice leveraged ProShares Ultra Financials (UYG) will not have exactly the same performance since they offer slightly different holdings in a different portfolio mix. Always look at the component stocks before buying any ETF — particularly leveraged or inverse ETFs.

Here are some of the most popular Rydex ETF offerings:

• Rydex 2x S&P Select Sector Financial ETF (RFL)
• Rydex 2x S&P Select Sector Health Care ETF (RHM)
• Rydex Inverse 2x Russell 2000 ETF  (RRZ)
• Rydex 2x S&P 500 ETF  (RSU)

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