Case-Shiller ETFs Bite The Dust (UMM, DMM)

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The death of an ETF is generally viewed as a failure or as an ill omen for other related ETF’s.  Today that is not the case despite the death of two exchange traded products.  Today was supposed to be the final trading day of the MacroShares Major Metro Housing Up Trust (NYSE: UMM) and MacroShares Major Metro Housing Down Trust (NYSE: DMM).  These are, ergo were, the two ETF products geared toward tracking home prices in the United States.


The underlying value of the 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 or minus any interest and expenses accrued in the trust for the period.    MacroShares Housing Depositor has confirmed via press release that today was the final day of trading for these exchange traded products.

On January 6th, a final distribution payment will be made to the UMM and DMM shareholders of record as of December 31st based on the underlying value of the Up and Down MacroShares Trusts.

Most will agree that these ETF products were not at all useful and not at all successful.  The “Housing UP” or UMM ETF traded very low volume and even managed to go three consecutive days this month with no shares traded at all.  There were only three days in the last 90 days where this traded over 10,000 shares in one day and the initial momentum of the ETF launch in late June was never sustained.   The “Housing Down” of the “DMM” also only had three days in the last 90 with volume over 10,000 shares in a day.  This volume here also never really took off or kept its early momentum.

Whether you agree with them or not is another issue, but RealMoney noted these as “two dangerous ETFs closed” and MarketWatch wrote “Shed no tears for departed funds.”

Not all ETF and ETN products are good.  There are hundreds and hundreds of ETF and ETN products which are listed on NYSE, AMEX, and NASDAQ now.  Some big traditional investors love the instruments and some hate them.  You can expect more and more of the lackluster products not making the cut in trading volume and/or in tracking the actual index to see their demise in 2010.

JON C. OGG

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