ETF News & Commentary
SAN DIEGO (ETFguide.com) - After months of anticipation and behind the scenes maneuvering, the MacroShares Major Metro Housing Down Trust (NYSEArca: DMM) and MacroShares Major Metro Housing Up Trust (NYSEArca: UMM) have finally launched.
The new trusts are the first exchange-traded products (ETPs) that propose to give investors exposure to residential real estate in key cities within the U.S. housing market.
The MacroShares Metro Housing ETPs are based on the S&P/Case-Shiller Composite-10 Home Price Index, a closely watched indicator of U.S. home prices in the 10 largest cities. The index measures single-family housing prices.
--Trusts Work in Tandem
Both DMM and UMM are paired trusts that work as follows: When MacroShares Major Metro Housing Up are created, an equal number of MacroShares Major Metro Housing Down are also created. UMM funds are invested in the “Major Metro Housing Up Trust.” DMM investor funds are invested in a separate “Major Metro Housing Down Trust”.
Both trusts enter into a settlement contract to pledge assets to one another over time, using a predetermined formula. The trusts feature a 3x leverage factor, such that the underlying value of each is intended to track three times the cumulative percentage change, upward or downward, in U.S. single family home prices, as measured by the S&P/Case-Shiller Composite-10 Home Price Index.
The products were developed by Karl Case and Robert Shiller. According to MacroShares, the trusts “provide investors with access to the housing asset class, allowing for leveraged investment in either the upward or downward movement of home prices with no issuer or counterparty credit risk.”
--New Emerging Markets ETFs
In related news, Barclays Global Investors (BGI) launched the iShares MSCI All Peru Capped Index Fund (NYSEArca: EPU) and the iShares S&P Emerging Markets Infrastructure Index Fund (Nasdaq: EMIF).
EPU tracks the MSCI All Peru Capped Index, which holds the top 25 Peruvian equity securities by free-float adjusted market cap. Thirteen of the 25 index constituents are materials producers, providing investors with significant exposure to commodities. Buenaventura Minas, Southern Copper, and Credicorp are among the EPU’s top holdings. The fund's annual expense ratio is 0.63%.
EMIF is benchmarked to the S&P Emerging Markets Infrastructure Index, which contains around 25 stocks. China (33.45%), Brazil (14.14%) and Argentina (9.33%) are EMIF’s largest country representations. The fund’s annual expense ratio is 0.80%.
--New Leveraged Long and Short ETFs
ProFunds Group has just introduced ETFs that attempt to triple the S&P 500’s daily performance. The ProShares UltraPro S&P500 (NYSEArca: UPRO) seeks 300% of the daily performance of the S&P 500, while the ProShares UltraPro Short S&P500 (NYSEArca: SPXU) seeks 300% of the inverse daily performance of the S&P 500.
ProShares already offers funds that attempt to double the daily performance of the S&P 500 (NYSEArca: SSO) along with funds that try to deliver inverse daily performance to the S&P with double leverage (NYSEArca: SDS) and without leverage (NYSEArca: SH).
"The S&P 500 has the largest following in the ETP industry with nearly $90 billion of assets benchmarked to it," said Michael L. Sapir, ProFunds Group Chairman and CEO.
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