MarcoMarkets, LLC, the firm co-founded by Yale economist and house price guru Robert Shiller, on Wednesday morning announced it is creating exchange-traded securities through which investors can bet on swings in home prices and home owners can hedge their investment.
The securities will be run through MacroShares Housing Depositor, a subsidiary of MacroMarkets LLC, which filed with the Securities and Exchange Commission for the securities, to be dubbed MacroShares Major Metro Housing Up and Down. The securities will track the S&P/Case-Shiller Composite-10 Home Price Index, have a ten-year term and will feature a 2x (200%) leverage factor.
Shiller has foreshadowed the creation of these securities in the past in remarks to the home building industry and in interviews. In one such interview with Big Builder in January, Shiller suggested that home builders themselves should hedge their land positions and inventory to insulate themselves against market downturns.
MacroMarkets plans to launch the new securities on the NYSE Arca under the ticker symbols UMM for MacroShares Major Metro Housing Up and DMM for MacroShares Major Metro Housing Down. The markets that will be tracked by the securities include the original 10 markets surveyed by the Case-Shiller Index, including Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco and Washington, D.C.
In a prepared statement, Shiller said the securities will allow "exposure to the price movement of home prices, a commodity that greatly affects both institutions and individual investors."
