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.
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!