Macro Shares filed for two ETFs that allow for gaming real estate prices as measured by the S&P Case-Shiller Composite 10 Home Price Index.The 10 in the name refers to the ten cities in the index which are Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, and Washington D.C.
One fund will go double long the index with ticker UMM and the other will go double short the index with ticker DMM.
You can read more about these from IndexUniverse and 24/7 Wallstreet.
We all know that real estate prices have been going down. One report a couple of weeks ago, via Bloomberg, had the Case-Shiller 20 Index (so a bigger sampling) declining by 14.4% versus the previous year.
For now there seems to be no consensus of how long before the house decline bottoms and turns around. Speculation on when the turn occurs could make both ETF very popular when they list, assuming the funds do list quickly.
Both oil macro shares garnered a lot of attention for the unintended consequence of trading very far their respective NAVs. One explanation I heard for this a long time ago, but it may not be correct, was that the oil macros had to price in the reality of contango and backwardation that exists in the oil market. I do not know if the new home price macros will have some other unintended consequence like maybe stemming from how Case-Shiller indexes don't price cash indexes only futures markets. At least I could not find cash indexes on Yahoo Finance, BigCharts or StockCharts.com.
Assuming no unintended consequence and once the market does bottom it is possible that this becomes a one-way trade for a long time. The history of housing cycles seem to have far fewer downturns than with equities. Keep in mind this is just an initial reaction/hunch that could be several years away from even having a shot of being correct.
Forgetting the specifics of the of these products, UMM and DMM stand to be the first of what I believe will be many more products that offer access to equity-like returns that don't really involve exposure to capital markets--things like GDP, carbon credits and some of the other ideas that have come up before in this site like maybe timberland in New Zealand and so on.
I am convinced that the alternative asset space is going to grow, asset allocations will as a matter of routine include alternative assets along with stocks, bonds and so on and products like these will be part of the mix.
It is still very early (UMM and DMM haven't even listed yet after all) and we all have more to learn but it will happen.
15 comments:
Looks like Claymore just got their frontier market etf listed. Article at indexuniverse.com with the details.
I turned in an article to TSCM on the FRN fund. It has been edited already so I think it will run today.
Where is the picture of the peaceful home taken from?
ASIDE:
I emailed twice over two weeks to find out the interest distribution on BZF (brazilian currency from Wisdomtree) and finally got the answer that the interest will be distributed only annually and they didn't want to tell me what the rate would be, but I could call and "discuss" it with them. Since, so far, every etf I have purcheased from them has had quite a bit lower dividend/interest than the index it tracks, I am not happy at all about getting BZF interest only annually. FXE, FXB, FXF, etc. all give out interest monthly. I understand that international equities have varying distribution schedules, but not currency instruments.
the picture is Whangerei, NZ which surprisingly is not in the Case 10 or even the 20 city index.
I had a chance to talk to someone from WT about the currency funds and I could swear he said monthly on those but I must be wrong.
You know the reasons behind their funds paying less that hoped for (growth of assets) but i can't figure out why other funds have not had such a noticeable difference between expectation and reality and it would be less of a problem if they paid quarterly on the equity funds.
That first year for SDS it grew like wildfire yet the dividend was about what was expected.
sl - I was looking at BZF as well, but noticed the same issue with annual distributions. I've actually held off buying it because of this reason. I want to shift some of my cash into emerging mkt currencies, but don't want to wait until once a year to receive a dividend.
I am sure they will loose a lot of investors because of this.
sl & anon - how about forex deposits offered by others - say everbank.com? Do they pay annually?
Thanks,
rackgen
slmasker,
Don't mean to pick on you but that info (annual distribution) was available on their Web Site. Don't you do any research before you buy a new product? Are you even aware that BZF doesn't actually hold the Real?
Roger, I think their "developed" currency ETFs pay out monthly or quarterly while the "emerging" ones pay out annually. The website also has a page with current money market rates for each country which gives you some idea of the yield you might expect.
I had to buy 100 shares of BZF the day it opened just for the hell of it; just to be able to say I "owned the Real" - even though I know I don't literally. If they actually did own the Real outright, I would have bought 1000 shares. But, like Roger, I'd prefer to wait and see if this ETF performs as it should. My only concern is that if and when it does "prove itself", the price may be a lot higher and I'll wish I hadn't been so cautious.
in looking under the hood of the currnecy products from WT they hold mostly commercial paper from all over and a small portion in appropriate NDFs to create the intended effect.
I have not followed them closely yet but I did look at CYB last week and at that time it was track the renminbi much better than CYN--but to be clear the time frame is too short for me to draw a conclusion.
The Claymore "frontier" ETF is 64% emerging markets. That's not my definition of a frontier fund.
Paul
Poland 24.86%
Chile 21.01%
Egypt 17.73%
Kazakhstan 7.72%
Peru 5.39%
Czech Republic 5.01%
Lebanon 3.09%
Nigeria 3.02%
Pakistan 2.79%
Oman 2.53%
Colombia 2.41%
Croatia 1.79%
Bahrain 1.38%
Georgia 0.76%
UAE 0.51%
Chile, yes, but what else are you calling emerging?
What does CHN own right now? What will it own six months from now? No way to know either which makes it difficult to work into a portfolio. If it were the only choice, ok, but it is not and the fact that the aobve is unknowable means I have no interest.
TAO; it would take much to convince me that the RE market in China might be a tad complicated. In trying to answer your question I am specifically not looking at what it holds or how it has done. The fund may do great, no idea, but my preference for China is to find very simple, for me, themes.
sorry, it would NOT take much to convince me......
Here's a list of EM nations in the MSCI EM index http://www.mscibarra.com/products/indices/equity/em.html
ARGENTINA
BRAZIL
CHILE
CHINA
COLOMBIA
CZECH REPUBLIC
EGYPT
HUNGARY
INDIA
INDONESIA
ISRAEL
JORDAN
KOREA
MALAYSIA
MEXICO
MOROCCO
PAKISTAN
PERU
PHILIPPINES
POLAND
RUSSIA
SOUTH AFRICA
TAIWAN
THAILAND
TURKEY
~77% of the Claymore fund is EM.
i follow the reasoning but I would say i do draw conclusion about those countries.
first let me say I disagree completely with the notion that Pakistan is emerging as opposed to frontier and while we're at it Jordan.
My thinking in believing that other than Chile the countries in FRN are reasonably thought of as frontier is that they are not easily accessed via funds and or listed adrs.
Poland has CEDC but that is actually hq'd in PA. Columbia has none that I am aware of, ditto Egypt, Czech Republic and Pakistan.
For Peru is there anything else besides BAP? PCU is actually around the corner from our offices in Phoenix.
Additionally these countries are much smaller and newer to capitalism.
My thinking is obviously far from airtight but that's how I see it.
Roger,
I don't necessarily disagree with you. If the Claymore fund has low correlation with an MSCI EM fund such as Vanguard's EM ETF (VWO) then its a good thing.
Here's what VWO contains for those EM country percentages:
Chile 1.4%
Columbia 0.2%
Czech Republic 0.8%
Egypt 0.6%
Pakistan 0.2% in "other?"
Peru 0.5%
Poland 1.7%
I agree they are low on the EM percentages so this is a good way to get exposure to those nations as a group.
Paul
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