Leveraged index funds and ETFs may surprise investors with their returns. That's the main thrust of Tom Lauricella's piece in the Monday issue of the Wall Street Journal, in which he highlights the fact that, because magnified index funds magnify an index's return each day, their net return over a longer period of time is a bit complicated. He cites UltraShort S&P500 ProShares (up 61 percent, compared with the S&P 500's 38.5 percent loss) and ProShares' Dow Jones U.S. Real Estate Index-tracking fund (down 50 percent, compared with the index's loss of 43 percent) as examples of the counter-intuitive results of such funds. Lauricella's article is part of the quarterly Investing in Funds special section published by the WSJ.

On the sector side, John Spence points to ETFs investing in building materials, construction, engineering, industrial equipment, metals and utilities as potential big gainers in 2009, in light of President-elect Barack Obama's plans for increased infrastructure spending. Plain index funds tracking those sectors, as well as specialized stock funds, will presumably do well, too, by that logic.

And perhaps the New Year wouldn't be officially off to a good start without further coverage of the eternal "active vs. passive" fund debate, revived in the WSJ by Karen Hube. Morningstar's Wenli Tan cites Bruce Berkowitz's Fairholme Fund as one potential gainer on the active side. 

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