Real Estate ETF's and Indices

[alanbrenton]

Some time ago, I read that it is now possible to purchase ETF's and/or indices that track U.S real (and geographical areas of the country)estate prices.

Are there similar instruments that track real estate prices in China and other developing countries?

Why would a financial institution like Barclays or State Street create such instruments and how do they make money off these when they are not a brokerage house?

Any information on this would be appreciated. Thanks.

[asdfvcx]

Some time ago, I read that it is now possible to purchase ETF's and/or indices that track U.S real (and geographical areas of the country)estate prices.
They track REIT's, which is not the same as real estate prices. REITs tend to own office buildings, shopping malls, etc., and make their money buying renting these out.

Are there similar instruments that track real estate prices in China and other developing countries?

I doubt it. The closest thing I could find is iShares FTSE EPRA/NAREIT Asia Property Yield Fund (IASP), which trades on the UK stock exchange. But it appears to only deal with developed countries in Asia-Pac. Property laws are probably not mature enough that someone would want to start a REIT in an emerging market.


Why would a financial institution like Barclays or State Street create such instruments and how do they make money off these when they are not a brokerage house?They make money by charging a management fee, the same as a mutual fund. (Although usually smaller than most mutual funds.)

[pitz]

Some time ago, I read that it is now possible to purchase ETF's and/or indices that track U.S real (and geographical areas of the country)estate prices.


Yes, there are CME-listed futures contracts on the Case-Shiller Real Estate price indicies that have been trading for over a year now.

I'm not aware of an ETF that provides exposure to those indicies, although, if you are an investment banker and want to start one, I'd be pleased to work with you ;).


Why would a financial institution like Barclays or State Street create such instruments and how do they make money off these when they are not a brokerage house?


Management fees. I know 2 guys in Saskatchewan who are packaging farmland into a fund right now, and sellling it into the market. Its all about collecting fees, while not taking any risk in buying or owning the underlying assets.

[alanbrenton]

Any way to go short the US real estate indices without taking excessive risks? How was one able to profit from the subprime mortage crisis down south using financial instruments?

[alanbrenton]

What do you think of this?

Claymore Launches China Real Estate ETF

http://seekingalpha.com/article/57742-claymore-launches-china-real-estate-etf