The initial public offerings (IPOs) for the new MacroShares real estate exchange traded funds (ETFs) are finally taking place.
The highly anticipated auction of MacroShares Major Metro Housing Up (UMM) and MacroShares Major Metro Housing Down (DMM) began on April 28 and will run through May 5 at 1 p.m. ET, according to Globe NewsWire. The initial offerings of both UMM and DMM will occur simultaneously.
Liam Denning for The Wall Street Journal reports that U.S. residential real estate was still valued at $18.3 trillion at the end of 2008, according to the Federal Reserve. The brainchild of economist Robert Shiller, they will offer investors a way of betting on rising house prices by buying “Up” shares, or expressing pessimism via “Down” shares, with no actual physical housing to back them.
The ETFs will be tied to the Standard & Poor’s/Case-Shiller Composite 10 Home Price index. When the Up and Down shares float, proceeds will be invested in U.S. government bills to ensure liquidity. If the index moves up, the trust behind the Down shares will shift a corresponding portion of its assets to the Up shares trust, raising the net asset value underlying the Up shares. The prices should follow.