As correctly advised by Morningstar, ordinary investors should avoid these types of ETFs.

Single-Commodity ETFs

Perhaps the most obvious examples of ETFs that no one needs are those that offer exposure to a single commodity or a small basket of commodities. Commodity funds started out admirably enough. The oldest offerings in the group provide investors exposure to a wide range of commodities and, thus, have the potential to add valuable diversification to a portfolio. But ETF providers have begun to offer funds that focus on narrower niches of the commodity market. While one might make an investment case for dedicating a small portion of assets to a gold ETF as a diversifier or an inflation hedge, it's difficult to see the investment merit of other pure-play commodity ETFs.

Currency ETFs

Very few individuals have reason to own these funds. Making successful bets on currencies requires knowledge of global economic factors and deft forecasting. Even if you possess such skills, currency movements have an annoying tendency to defy the economic odds. For example, given the U.S.' burgeoning trade and budget deficits, most economists predicted a weakening dollar in 2005, yet the greenback flouted that consensus and strengthened against most major currencies that year. That's why most foreign mutual fund managers avoid currency wagers--they are notoriously hard to get right. Plus, they add extra trading costs that erode returns.

What's more, currency ETFs aren't as tax-efficient as other ETFs because interest income and gains and losses on currency are all taxed at ordinary income-tax rates rather than at lower long-term capital gains rates.

Leveraged ETFs

These funds' managers use a combination of shorts, options, and futures to carry out the ETFs' stated goals. But there are a lot of moving parts to these strategies, and there's no guarantee that they will achieve their objectives. In fact, some of ProFunds conventional funds have fallen significantly short of their goals. Rather than doubling its benchmark's performance, ProFunds UltraBull's (ULPIX) (the conventional counterpart to ProShares UltraShort S&P 500) five-year trailing returns actually trail the S&P 500's returns. That's partly because the fund's losses during the bear market were more than twice that of its benchmark and, because of the effects of compounding, those losses have a significant impact on long-term returns. The fund's performance has also been eroded by a high fee structure and the high trading costs of the strategy. Furthermore, while this fund hasn't succeeded in doubling its benchmark's return, it has succeeded in doubling its volatility. Its standard deviation of returns (a statistical measure of volatility) is twice that of the index's. Indeed, the fund's downside can be excruciating: 2002 was bad enough when the S&P dropped 22.2%, but this fund plunged 46.2% that year. Few investors possess the ironclad stomach necessary to endure such setbacks, and most would do well to steer clear of leveraged offerings altogether.