The panelists are three SA contributor portfolio managers who use ETFs in client portfolios and write actively on new developments in the field of exchange traded funds. Here are the panelists, their credentials and a preliminary writeup from each of them with their views on leveraged ETFs:

Direxion, the ETF sponsor responsible for many of the most heavily-traded ETFs on the market, is reportedly making some changes to its line of mutual funds that may ultimately impact the leveraged ETF industry.

Many investors have the misconception that leveraged ETFs are a new invention. While their packaging into an ETF structure is a relatively new concept, the underpinnings of these securities have been around in leveraged mutual funds for quite some time.

Leveraged and inverse ETFs. Just mention those words, and you’re likely to receive an earful about them. Investors have strong feelings about these funds, ranging from anger to confusion to loving them for what they can do.

What Are Leveraged and Inverse ETFs?

Jim Rogers, noted investor and founder of the highly successful yet now defunct Quantum Fund (with George Soros) recently conducted an interview with Newsweek and we wanted to highlight the interesting bits. For the most part, Rogers has been saying the same thing on mainstream media appearances over the past few months. He appears on TV so often that he keeps having to repeat himself. But, at least he's not like Jim Cramer and doesn't throw out a million ideas just for the sake of new content.

So, while Rogers might not always have new points, it's interesting to hear him elaborate in more detail on some of the investment themes he has divulged thus far. We've covered many of his major stances on the blog before, most notably publishing a summary of Rogers' recent portfolio. Some of his main bullish theses include agriculture and commodities. Focusing in particular on agriculture, Rogers has become so bullish that he has gone to the extreme of investing in physical farmland. He touches on some of these theses again in his interview, where he talks about commodities:

The fall in global trade looks bad for commodity investors over the next couple years. Commodity prices appreciated on rising trade volumes that were thought to be a permanent fixture of the new economic order. That view needs to be reassessed and so do expectations for a quick rebound in commodity prices.

Global trade volumes spiked higher on the paper for goods trading relationship between the U.S. and China and the U.S. and Japan. Both Asian exporting nations sold local currency for U.S. dollars that were recycled into U.S. Treasury bonds. This allowed American households to consumer SUVs and VCRs they could not afford by keeping rates low and credit flowing.

A Ponzi scheme is defined as a phony investment program where the introduction of new funds is used to create “profits” for those already in the game. Ponzi schemes typically have some purported economic rationale for the profits, but at the end of the day, the basis is shown to be a sham as well. This is a pretty good description of Wall Street’s commodities-as-an-asset class machinations.

Wall Street positioned long-only commodity index investing as a core asset class and critical diversification. Investors piled into this strategy, particularly in the first half of last year, with total participation estimated to have peaked around $300 Billion. These inflows drove prices higher which produced positive returns for earlier investors, leading to yet more investors becoming attracted, again driving up prices, creating a vicious cycle analogous to a classic pyramid. Unlike a true Ponzi scheme, it was not just the investors who ultimately were harmed, but the economy as a whole. Mike Masters and Adam White recently released a report chronicling the damage done to the economy by the commodity bubble fueled, at least in part, by the participants in this investment strategy. The damage easily exceeds $100 Billion.

Leading indicators in the major seven economies and major non-OECD economies, particularly China, India and Russia, point to deep slowdowns. And this does not bode well for commodity prices.

The data released by the OECD earlier this week indicates a synchronized decline in industrial production, with widespread softness among the BRIC economies, which also includes Brazil.

Many of our readers at AboutETFs.com enjoyed our earlier article The Complete List of Currency ETFs and have been requesting a similar list for commodities. So, once again, by popular demand, here is our newest list, The Complete List of Commodity ETFs and ETNs, as of October 20, 2008.

COMMODITY BASKETS (All Commodities)

We recently analyzed the 800+ US ETFs to see which ones were the most overbought and oversold relative to their 50-day moving averages.  As shown below, four double short commodity ETFs top the most overbought list, with the homebuilder ETF (XHB) ranking fifth.  Other notables on the overbought list include KRE and IAT (regional banks), DUG (inverse oil & gas stocks), XRT (retailers), KBE and PJB (banks), and DGZ (inverse gold).

click to enlarge

I'd like to take a moment to explain why I am committed to my ProShares UltraShort Financials ETF (SKF) position and why I'm generally bearish on even owning any stocks or bonds for the near-term.

Four percent of SKF is short Bank of America (BAC). SKF has a lot of short positions and swaps for megabanks, I-Banks, Fannie (FNM) and Freddie (FRE), and every type of lending institution that makes up the index. But the bet on BAC is the biggest.

Broad Based Commodity ETFs and ETNs
E-TRACS UBS Bloomberg CMCI Index ETN (UCI)
GreenHaven Continuous Commodity Index (GCC)
GS Connect S&P GSCI Enhanced Commodity Total Return Strategy Index ETN (GSC)
iShares GSCI Commodity-Indexed Trust ETF (GSG)
iPath Dow Jones-AIG Commodity Index Total Return ETN (DJP)
iPath S&P GSCI Total Return Index ETN (GSP)
PowerShares DB Commodity Index Tracking Fund ETF (DBC)
Opta Lehman Brothers Commodity Index Pure Beta Total Return ETN (RAW)

HOLDRs: Do They Have A Hold On You?

HOLDRs, or Holding Company Depositary Receipts, are one of the most popularly traded ETFs on the American Stock Exchange on any given day.

Leveraged exchange traded funds (ETFs) are taking center stage of the industry as one of the fastest-growing segments.

Although investor sentiment is generally moving away from these high performance products, they're being offered at a faster and faster rate, reports Eric Uhlfelder for Financial Times.

By Matthew Hougan

NEW LISTINGS

Deutsche Bank Adds More Long, Short Commodities ETNs

By Murray Coleman

On the heels of issuing seven exchange-traded notes tied to gold and agriculture indexes to leapfrog the competition in leveraged and inverse exchange-traded notes, Deutsche Bank (DB) on Tuesday said it plans to launch four more broad-based commodities ETNs.