When it comes to investing, some people just love to swing for the fences. Risk is just a

four letter word so long as they’re able to position themselves for maximum gains. For

those looking to be really aggressive, taking a look at leveraged investments might be

an option. Leveraged investments (which could include ETFs, mutual funds or option

contracts) look to multiply the daily return on an underlying investment by as much as

twice or more.

Companies like ProFunds and Direxion offer leveraged ETFs covering all sorts of indices

and sectors. Better yet, you can even invest in leveraged ETFs that are designed to move

in the opposite direction of an index. So whether you think an index, sector or country is

going to move up or down, there’s probably a leveraged fund out there to help you take

advantage of it.

But leveraged investments are quite risky and like any other non-core investment in your

portfolio should be added in small percentages. Alternate investments can do a great job

of enhancing your return potential while diversifying away a portion of your portfolio

risk but only if it’s done in moderation. Added in too large a quantity, your portfolio

could become overly aggressive and susceptible to significant value swings should the

market experience another downturn or correction.

Like many non-core positions within your portfolio, leveraged ETFs should probably

occupy no more than 5-10% of assets. If you’re new to leveraged ETFs, you may want to

consider adding a small position in order to make sure you’re comfortable with the risk of

the position before adding to it.

Leveraged ETFs can be a great return enhancing vehicle for your portfolio but you need

to remember that there’s significant downside risk. ETFs targeting banks, European

stocks and Treasury rates have been hit hard in recent months so make sure you examine

your own risk tolerances before committing.

When it comes to investing, some people just love to swing for the fences. Risk is just a four letter word so long as they’re able to position themselves for maximum gains. For those looking to be really aggressive, taking a look at leveraged investments might be an option. Leveraged investments (which could include ETFs, mutual funds or option contracts) look to multiply the daily return on an underlying investment by as much as twice or more.

Companies like ProFunds and Direxion offer leveraged ETFs covering all sorts of indices and sectors. Better yet, you can even invest in leveraged ETFs that are designed to move in the opposite direction of an index. So whether you think an index, sector or country is going to move up or down, there’s probably a leveraged fund out there to help you take advantage of it.

But leveraged investments are quite risky, and like any other non-core investment in your portfolio should be added in small percentages. Alternate investments can do a great job of enhancing your return potential while diversifying away a portion of your portfolio risk, but only if it’s done in moderation. Added in too large a quantity, your portfolio could become overly aggressive and susceptible to significant value swings should the market experience another downturn or correction.

Like many non-core positions within your portfolio, leveraged ETFs should probably occupy no more than 5-10% of assets. If you’re new to leveraged ETFs, you may want to consider adding a small position in order to make sure you’re comfortable with the risk of the position before adding to it.

Leveraged ETFs can be a great return enhancing vehicle for your portfolio, but you need to remember that there’s significant downside risk. ETFs targeting banks, European stocks and Treasury rates have been hit hard in recent months, so make sure you examine your own risk tolerances before committing.

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