Over the past week, ETF-hungry investors were served up 20 new offerings that provide exposure to niche markets, currencies and sophisticated trading strategies, though they may not be the best choice on the menu for the everyday retail investor.

The most recent offering hit the market Monday, with the debut of Rydex Investments' six new ETFs tracking foreign currencies. Rydex had already created the first currency ETF with the

Euro Currency Trust

(FXE) - Get Report

, an ETF that tracks the euro.

Its new funds are the

CurrencyShares British Pound Sterling Trust

(FXB) - Get Report

, the

CurrencyShares Australian Dollar Trust

(FXA) - Get Report

, the

CurrencyShares Canadian Dollar Trust

(FXC) - Get Report

, the

CurrencyShares Mexican Peso Trust

(FXM)

, the

CurrencyShares Swedish Krona Trust

(FXS) - Get Report

and the

CurrencyShares Swiss Franc Trust

(FXF) - Get Report

.

All of these currency plays hold the actual currencies rather than futures contracts, and thus mimic the currency's spot price. A single share of each ETF represents 100 units of the base currency.

Meanwhile, last week saw the launch of new ETFs from ProShares and State Street Global Advisors, the investment management group of

State Street

(STT) - Get Report

.

Four of the ProShares offerings allow investors to get short exposure to a stock index without having to set up margin accounts or cover margin calls:

Short QQQ ProShares

(PSQ) - Get Report

,

Short S&P500 ProShares

(SH) - Get Report

,

Short MidCap400 ProShares

(MYY) - Get Report

and

Short Dow30 ProShares

(DOG) - Get Report

. Each ETF bets against the titular index.

For magnified exposure, ProShares also set up "ultra funds." These ETFs are designed to capture

twice the move of the underlying indices mimicked.

SSgA's new funds, which started trading on the American Stock Exchange Thursday, include ETFs focusing on the red-hot oil industry -- the

SPDR Oil & Gas Equipment & Services

(XES) - Get Report

and

SPDR Oil & Gas Exploration & Drilling

(XOP) - Get Report

funds -- as well as the mining industry, with the

SPDR Metals and Mining

(XME) - Get Report

fund. Its other new offerings track the pharmaceutical, banking and retail sectors.

While the latest twists on the traditional ETF give investors an opportunity for diversification or an inroad into the world of a sophisticated short-seller, they also assume an investor can use these products as an active money manager might, says Sonya Morris, a mutual fund analyst with Morningstar. And of course, not all retail investors are that savvy.

"Originally, ETFs came out and built on the premise behind indexing -- that if you have a broad portfolio and keep expenses low, the odds of beating the typical active manager are pretty good," says Morris. "But the landscape has changed over the past couple of years and ETF providers have sliced and diced the market into narrower and narrower segments, which is very different from the original intent and the goal of indexing."

State Street says its newest ETFs have been developed to meet demand for higher-return vehicles and more-refined portfolio construction.

"These ETFs provide a real benefit through their precise exposure to targeted industries," says Greg Ehret, senior managing director of SSgA.

But Morningstar's Morris notes that by breaking down the market into smaller and smaller segments, these extremely focused funds could attract performance chasers.

"That was a phenomenon in the late 1990s, when investors ran after Internet funds and broadband funds, and we all know that didn't end particularly well for investors," she says. "But the ghost of the 1990s has not been enough to keep momentum chasers out of the market. For example, we've seen things like energy funds gathering assets at a breakneck pace. Performance chasing is just one of those behavioral biases that investors have."

Dodd Kittsley, State Street director of ETF Research, says that Morris has a valid concern, but ETFs have never purported to be solutions.

"They're merely tools," says Kittsley. "These more granular, targeted ETFs provide investors a way to access targeted sectors in a more diversified way than they were able to before, and at a very low cost."

Kittsley also emphasizes that some of the more industry-specific ETFs are probably more useful for sophisticated institutional investors.

"You can see this reflected in volume," says Kittsley. "The homebuilder and biotech ETFs we launched in February were very much driven by the institutional investor."

Michael Sapir, chief executive of ProShares, also emphasized that his company's new products aren't necessarily for beginners. "The target audience for these funds is the sophisticated investor, whether an individual or a financial professional."

"Most people understand how to simply buy a stock, but not short selling. These are for people who understand or are interested in potentially getting short exposure to an index," says Sapir.

Currency Concerns

Rydex says that while its new currency funds were designed for financial professionals, individuals could also use the ETFs for diversification.

"We have seen significant interest from people who wanted more currency diversification," says Tim Meyer, Rydex Investments' ETF business-line manager. "Stocks, bonds and cash have represented what people thought was true diversification. But new strategies are available and currencies and commodities now allow for investors to have a broader and truer diversification."

However, Joel Nathan Ward, president of Learn:Forex and manager of the Joel Nathan ForexFund, notes that for investors to take a long position on a currency, they are betting against the dollar.

"I think there's something to be said for the fact that the dollar will likely weaken in the future, but this is taking a completely one-sided view," says Ward. "If you're wrong, then the only way you're going to get your money is to exit the fund to stop the losses."

He adds that this raises a concern over liquidity. "If everybody's prediction about the dollar reverses, who will take the ETF off your hands?" asks Ward. "For the major currencies, the actual cash market is never going to have that liquidity problem because it is so huge.

Meyer, on the other hand, points out that currency trading can get cumbersome and expensive if investors are in the derivatives market, the spot cash market or if they go to the bank and convert U.S. dollars.