It was bound to happen, I suppose. While exchange-traded funds have not yet attracted the multi-trillions of dollars that mutual funds have, ETFs have become popular enough they’re starting to acquire some of the bad habits of their older rivals.

The first generation of ETFs were low-cost, broadly diversified products from firms like Barclays and Vanguard, well suited to average investors wishing to expose the core of their portfolios to the broad equity market.

But we are well into the second phase of ETF proliferation, with more volatile sector ETFs sporting considerably higher price tags. How complex it’s become can be inferred from the fact BetaPro Management Inc. is hosting an all-day Horizons ETF University session today at Ryerson University, part of a seven-city road show. 

BetaPro came under fire last week from consumer advocacy group FAIR for not disclosing clearly enough

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Andy O'Rourke says the nuances of intraday trading and the impact of compounding in leveraged ETFs need to be fully understood.

Just four ETF companies took in more net new cash in November than DirexionShares. Its Large Cap Bull 3X Shares have been among the most heavily traded NYSE Arca stocks lately. IU.com's Eric Rosenbaum recently spoke with Direxion Funds' marketing director Andy O'Rourke about the rapid rise to ETF prominence and how the fund company can keep the momentum up.

IU.com: Is the company surprised by how quickly the market embraced the 3X approach?

O'Rourke: As of Dec. 12, we surpassed $800 million in assets. We were at least somewhat surprised that the response has been so positive. We hope that demand stays where it is, and we have every reason to believe it will, but we won't consider the ETFs an absolute success until their longevity is proven.

IU.com: Were

Investors can now trade triple-leveraged ETFs. That means three times the return (or loss) of the underlying index. Rick Pendergraft says stocks could be in line for a major rally in the first half of 2009. If it does, the Large Cap Bull 3x Shares ETF (NYSE:BGU) will ensure huge profits for investors willing to “think big”.

This from Investor’s Daily Edge:

What is my top pick for 2009? It is a new Exchange Traded Fund from a group called Direxion Funds. The people at Direxion have taken ETFs to a new level they are offering funds that have triple the leverage of the underlying index.

What does this mean? It means that if you have one of these ETFs and the index goes up one percent in a day, this ETF will go up three percent. If the index

It wasn't just the usual suspects to whom the assets were flowing.

Net cash flow into exchange-traded funds in November blew away October levels, with more than $26.3 billion coming into ETFs, according to data from the National Stock Exchange.

In October, during the worst of the investor panic, net cash flow into ETFs was only $7.3 billion. There were 271 ETFs and 26 exchange-traded notes with net outflows in October, and 179 ETFs and 16 ETNs with outflows in November.

It wasn't just the usual suspects to whom the assets were flowing. While the iShares, SPDRs, Vanguard and ProShares had their usual big flows, most notable was the arrival of Direxion Funds as a serious competitor, which took in $511 million in net new cash in November.

Though ProShares itself did not slow down while its new competitor made its face known to the ETF world. ProShares took in $4.6