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

MacroShares Major Metro Housing Up and Down securities will be based on the S&P/Case-Shiller Composite-10 Home Price Index, which is a a nationally recognized gauge for U.S. home prices.  For a representation, it tracks the following cities: Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, and Washington D.C. 

We would like to note that with this not having any representation in Texas at all that it is not at all a full representation, and we’d even argue that based on city selection those using this index for a comparison are using it to keep the average housing prices higher.  regardless of our opinion on the index not being a fully representative representation of the US housing market, it will allow investors to access what MacroShares itself calls "this important, but illiquid, asset class."

When these are launched, these paired securities will have a 10-year term and will feature a 2x (200%) leverage factor.  MacroMarkets LLC plans to launch the new securities on the NYSE Arca under the ticker symbols:

• UMM – MacroShares Major Metro Housing Up
• DMM – MacroShares Major Metro Housing Down

And who says that ETF’s and ETN’s have ceased being creative?

Jon C. Ogg
June 11, 2008