Of the 74 leveraged funds that take short positions, 26 were introduced in the past year. Thirty of the remaining 48 funds have generated returns in the past year. But the one-year average for the group has shrunk to 9.1%.

Industrial stocks have surged in the past month, causing the ProShares UltraShort Industrials ( SIJ) to lose 26%. The fund's one-year return has withered to 39% from 188% two months ago.

Best Performing Inverse ETFs Surrender Gains
Fund (Ticker) Rating Total Return 1 Month Total Return 1 Year
PowerShares DB Commodity Double Short ETN (DEE) U 2.00% 209.78%
PowerShares DB Commodity Short ETN (DDP) U 0.36% 86.87%
PowerShares DB Agriculture Double Short ETN (AGA) U -6.60% 48.64%
ProShares UltraShort Industrials (SIJ) B+ -26.15% 39.30%
ProShares UltraShort Utilities (SDP) C+ -5.58% 38.62%
PowerShares DB Agriculture Short ETN (ADZ) U -4.16% 36.90%
Rydex Inverse 2x S&P 500 ETF (RSW) C -15.42% 36.03%
ProShares UltraShort Dow30 (DXD) C+ -11.07% 34.91%
ProShares Short MSCI EAFE (EFZ) C -8.50% 28.83%
ProShares UltraShort S&P500 (SDS) C+ -15.61% 28.00%
Source: TheStreet.com Ratings & Bloomberg 5/5/2009

Unlike mutual funds, which are meant to be held for years, leveraged ETFs are designed for short-term trading.
Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.

If you liked this article you might like

How to Get Rich Using Warren Buffett's Favorite Stock Market Indicators

How to Make Your Life Successful Just Like Billionaire Warren Buffett

With the Fed, It's Different This Time

How to Live Just Like Billionaire Warren Buffett

Why Hurricanes Won't Force the Fed to Ditch a December Rate Hike