Real Estate Is Changing. Two Leveraged ETFs Are On Top of It

The real estate market might be in an inflection point, feeding into bullish strength for the Direxion Daily MSCI Real Estate Bull 3X ETF (DRN).

“Despite the coronavirus’s negative impact, the housing market generally rode a wave of positivity through the balance of 2020, fueled by strong demand and historically low interest rates,” a Forbes article said.

“One thing the Covid-19 outbreak and subsequent quarantine period has done is reinforce the value of the home,” the article added. “The additional time most families are spending together has caused Americans to take a much-needed inventory of things that matter most. The result of this introspection is sparking a new set of demands that are reshaping the housing market.”

As for DRN, it seeks daily investment results equal to 300% of the daily performance of the MSCI US IMI Real Estate 25/50 Index. The index is designed to measure the performance of the large-, mid- and small-capitalization segments of the U.S. equity universe that are classified in the real estate sector as per the GICS.

DRN Chart

Can the Trends Hold?

Right now, the real estate market favors the seller given the low inventory and high demand. Can this trend prevail while interest rates are still relatively low?

“There are many factors that will determine whether these trends will continue throughout 2021 or if they were simply a knee-jerk reaction to an unforeseen event,” the Forbes article said. “Rising interest rates, housing affordability, the availability of the Covid-19 vaccine and other variables will likely set off another shift in the market. While homeowners’ evolving demands are likely here to stay, the rest remains to be seen.”

Conversely, bearish real estate traders can turn to the Direxion Daily MSCI Real Est Bear 3X ETF (DRV).

DRV seeks daily investment results equal to 300% of the inverse of the daily performance of the MSCI US REIT Index, which is a free float-adjusted market capitalization weighted index that is comprised of equity REITs that are included in the MSCI US Investable Market 2500 Index. DRV invests in swap agreements, futures contracts, short positions or other financial instruments that, in combination, provide inverse or short leveraged exposure to the index.

For more news and information, visit the Leveraged & Inverse Channel.