At a time when exchange traded funds (ETFs) continue to innovate and providers continue to launch new products, two ETFs that were the only true plays on residential real estate have decided to close their doors.
MacroShares has decided to close its MacroShares Major Metro Housing Up Trust (UMM) and its MacroShares Major Metro Housing Down Trust ( DMM), two ETFs that tracked U.S. home prices based on the S&P/Case Shiller Composite-10 Home Price Index. The underlying value of these trusts will be determined based on the November 24, 2009, release of the Reference Value of the S&P/Case-Shiller Composite-10 Home Price Index, plus adjustments up or down for interest and expenses accrued in the trust for the period.
A final distribution payment, based on this underlying value, will be made on January 6, 2010, to shareholders on record as of December 31, 2009. It doesn’t come as too big of a surprise that these funds are closing their door since their trading volume had remained relatively low, with total volume exceeding 10,000 shares in a day only three times in the last three months and some days seeing no shares being traded at all.
This is a blow to real estate ETFs, but there are still plenty of ways to play the sector. One can utilize the SPDR S&P Homebuilders (XHB), which carries an expense ratio of 0.35% and holds companies like Lowe’s (LOW) and Home Depot (HD).
Another ETF to consider is the iShares Dow Jones US Real Estate (IYR), which holds companies like Simon Property Group (SPG) and Public Storage (PSA) and carries an expense ratio of 0.48%.
A third play is the Vanguard REIT ETF (VNQ), which carries an expense ratio of 0.15% and holds companies like Vornado Realty Trust (VNO) and Boston Properties (BXP).
