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Economist Robert J. Shiller -- the one who identified the internet bubble and the housing bubble as bubbles before pretty much anyone else did -- will introduced a pair of new ETFs later this month in partnership MacroShares.
The MacroShares' Major Metro Housing product will consist of two kinds of shares: "up" shares and "down" shares. If you want to bet that housing prices will go up, buy the "up" shares. If you're feeling bearish, buy the "down" shares. But the fund won't be investing in housing at all.
The Wall Street Journal describes (subscription required) the relatively simple idea behind the pair of funds: "MacroShares will be tied to the Standard & Poor's/Case-Shiller Composite 10 Home Price index. When the Up and Down shares float, proceeds will be invested in U.S. government bills to ensure liquidity. If the index moves up, the trust behind the Down shares will shift a corresponding portion of its assets to the Up shares trust, raising the net asset value underlying the Up shares. The prices should follow."
So far, investors have shown little interest in real estate-related futures and options, bullish or bearish. The hope with this one would seem to be that the Shiller brand will help it stand out from other ETFs.
The question is whether it's too late in the housing decline for the product to be particularly attractive. If home prices stabilize at something like the current prices and then appreciate at a more normal rate over the next few years, the funds could be a big waste of time.
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