MacroShares is about to try their luck in the real estate market, with the launch of new exchange traded funds (ETFs) which will track this asset class.

Robert Shiller is putting his wits, with the help of other investors, to the test with the launch of up-down housing ETFs.  They are in the final stages of approval with the SEC. Bob Pisnai for CNBC says these ETFs will trade on the NYSE Arca later this month:

  • The Major Metro Housing Up (UMM) will deliver three times the return of the benchmark.
  • The Major Metro Housing Down (DMM) will deliver three times the INVERSE return of the benchmark.

The benchmark index is the S&P Case-Schiller Composite-10, an index comprised of real estate sales from San Diego, Los Angeles, San Francisco, Las Vegas, Denver, Chicago, Boston, New York, Washington, DC, and Miami. The 10 cities comprise about 30% of all the real estate transactions in the United States.

Initially there will be a Dutch auction IPO where investors can bid how much they are willing to pay for an Up share or a Down share.

For investors who have significant exposure to the real estate market, this could be an opportunity to hedge your bets. If real estate values continue to fall, the Down should go up in value. If the real estate market starts to recover, the Up should go up in value.  These aren’t your typical ETFs, so be sure you understand them before taking the plunge.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.