An pair of ETPs designed to track the S&P/Case-Shiller Composite-10 Home Price Index will soon be available. In theory, these could be used to hedge against a drop in your home, speculate about a rise in home prices without actually purchasing a home, or generate extra income from your house akin to a covered call. In practice, the pair have a teeter-totter structure which is unintuitive (but necessary to track an arbitrary quantity like Case-Shiller), and the prices interact with the closing date of the underlying securities in August 2014 which make them more like a futures contract.
The ETPs fill a need because the obvious choice, real estate ETFs, are poorly correlated with Case-Shiller. However this is a definite wait-and-see, because if they really end up priced like a futures contract it might not prove useful for shorter term hedging.
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Paul,
ReplyDeleteCaught your reference to my post. Thought you might want to check out my new post on the UMM and DMM etf's. In that I challenge the SeekingAlpha post you reference on the issue of how they will trade short term since they are a long term futures like contract. I think they will follow the Case Shiller short term on a relative basis.
Awesome.
ReplyDeleteThanks Caveman!