A new filing by Direxion Funds could seriously up the ante in the realm of leveraged exchange-traded funds. The firm, which is known for its leveraged index mutual funds, has filed 36 proposed ETFs with the Securities and Exchange Commission.

There's been a lot of activity in the leveraged funds market lately, but these funds take the concept to the next level - they offer THREE TIMES the performance (or three times the inverse) of the daily performance of the indexes they are tied to. This means that the proposed Direxion S&P 500 Bear 3X Shares, for example, will offer three times the inverse of the daily performance of the S&P 500. Currently, available ETFs offer no more than double exposure to their underlying indexes, whether they be leveraged or inverse funds.

Direxion currently offers the most-magnified exposure among leveraged index mutual funds, says Direxion Vice President and Marketing Director Andy O'Rourke. The firm has a few funds that offer 2.5X their underlying benchmark, but none so far that offer triple exposure.

The leveraged ETFs would achieve their promised returns by investing in futures, swaps and other derivatives, while the inverse funds would engage in short sales to do so.  The funds would cover a variety of asset classes, including sectors, international regions, foreign countries, domestic benchmarks, real estate and even "commodity-related" stocks.

In addition to the S&P 500, the filing covers Bull and Bear ETFs for each of the following indexes:

• MSCI Broad Market Index
• Nasdaq-100
• Dow Jones Industrial Average
• S&P MidCap 400 Index
• Russell 2000 Index
• Nikkei 225 Index
• MSCI EAFE
• MSCI Emerging Markets Index
• S&P BRIC 40 Index
• FTSE/Xinhua China 25 Index
• Indus India Index (which underlies the new PowerShares India Portfolio)
• S&P Latin America Index
• MSCI Commodity-Related Equity Index (which covers stocks in commodity-related industries)
• Energy Select Sector Index
• Financial Select Sector Index
• Dow Jones U.S. Real Estate Index
• S&P U.S. Homebuilding Select Industry Index

That's a lot of funds, but O'Rourke said the firm has not decided if it will launch them all, noting "Nothing is set in stone." As it is, he said the registration period will most likely last at least through the summer. That means Direxion could be looking at entirely different market conditions by the time the funds are ready to be brought to market.

The prospectus lists the management fees for each ETF at 0.75%. Should that represent the total expense ratio at their launch, the funds would be 20 basis points cheaper than ProShares' entire stable of leveraged and inverse ETFs, while offering even more intense exposure. Rydex also offers 200% leveraged and inverse ETFs at the 0.75% price point.

But the real question is whether ETF investors will be interested in this kind of fund. Certainly ProShares has proven that leveraged and inverse ETFs can find an audience - the firm has accumulated a combined total of about $17 billion in assets in its more than 60 ETFs since it began launching them in June 2006. But triple exposure might be seen by some investors as a wee bit... volatile?

At least in the U.S. volatility levels have been increasing recently (just check out the VIX), so a fund that multiplies the daily performance of an index by three is looking at some potentially abrupt movement. But then again, investors looking at leveraged funds aren't exactly running in terror from the spector of volatility as it is, so the promise of even greater returns could very well outweigh risk concerns.

At the very least, it's interesting...