{"id":1346,"date":"2021-07-12T10:44:07","date_gmt":"2021-07-12T10:44:07","guid":{"rendered":"https:\/\/investwithanedge.com\/?page_id=1346"},"modified":"2021-07-12T10:44:07","modified_gmt":"2021-07-12T10:44:07","slug":"new-macroshares-will-not-track-case-shiller-index","status":"publish","type":"page","link":"https:\/\/investwithanedge.com\/new-macroshares-will-not-track-case-shiller-index\/","title":{"rendered":"New MacroShares Will Not Track Case-Shiller Index"},"content":{"rendered":"
MacroShares Major Metro Housing Up (UMM)<\/strong> and MacroShares Major Metro Housing Down (DMM)<\/strong> began trading today. Do not buy these products until you have read and understand the prospectus, especially the parts where it explains that they will not track the underlying Case-Shiller index.<\/em><\/p>\n There is widespread misunderstanding as to what these securities actually are. Marketing literature and the April press releases issued by MacroMarkets state \u201cthe securities are designed to track the change in U.S. Home Prices as measured by the closely-followed S&P\/Case-Shiller Composite-10 Home Price Index.\u201d<\/p>\n According to other reports, the funds are designed to deliver +300% and -300% of the return of the S&P\/Case-Shiller Home Price 10 Index. These marketing slogans have many investors believing that the new MacroShares are great products.<\/p>\n I believe those statements are extremely misleading. There is no asterisk pointing to the disclosures. Here are just a few of the reasons why these securities will not track<\/strong> the S&P\/Case-Shiller Composite-10 Home Price Index:<\/p>\n The indicative values that the MacroShares will not track are designed to follow 3x (and 3x the inverse of) the return of the S&P Case-Shiller Composite-10<\/strong>, an index comprised of real estate sales from San Diego, Los Angeles, San Francisco, Las Vegas, Denver, Chicago, Boston, New York, Washington, DC, and Miami.<\/p>\n In reality, only when the trust expires on November 25, 2014 will owners of the new MacroShares be able to receive a value tied to the Case-Shiller Index (minus five year\u2019s worth of fees and expenses). Fees = 1.25% or $150,000 per year whichever is greater, plus fixed fees of $600k.<\/p>\n These products were expected much earlier in the year but faced many delays. The initial underlying value is being determined by the index value of 162.17, which was the published value of Feb 24, 2009 (representing home prices in October, November, and December of 2008). However, the index value has been subsequently revised to 162.11 introducing yet another reason for tracking error.<\/p>\n The Case-Shiller Index values and their subsequent revisions are: 3\/31\/09 = 158.04 (revised to 157.96), 4\/28\/09 = 154.70 (revised to 154.60), 5\/26\/09 = 151.36, and today\u2019s 6\/30\/09 = 150.34.<\/p>\n Therefore, according to the fact sheets, the underlying values at inception are $29.98 for DMM and $20.02 for UMM. According to my calculations, the underlying values should be +\/- 21.9% (3x the change from 6\/30\/09 index to 2\/24\/09 index value), or $19.53 for UMM and $30.47 for DMM. However, as outlined above, the shares will not track the underlying values.<\/p>\n Early termination will occur if the index range of 108.11 to 216.23 is exceeded prior to maturity, as one of the pair will have an underlying value of zero. There are a total of 13 early termination triggers listed in the prospectus.<\/p>\n The first trades have now gone through: UMM 1,000 shares at $20.03 and DMM, 900 shares at $30.87.<\/p>\n Additional information:<\/p>\n UMM Fact Sheet DMM Fact Sheet UMM and DMM prospectus<\/p>\n Road Show pdf The retail roadshow video (dated 4\/20\/09) has been taken down.<\/p>\n Disclosure: I have no positions in these securities and I do not receive any compensation or consideration from the advertising and marketing efforts of MacroMarket or MacroShares.<\/p>\n","protected":false},"excerpt":{"rendered":" MacroShares Major Metro Housing Up (UMM) and MacroShares Major Metro Housing Down (DMM) began trading today. Do not buy these products until you have read and understand the prospectus, especially the parts where it explains that they will not track the underlying Case-Shiller index. There is widespread misunderstanding as to what these securities actually are. …<\/p>\n","protected":false},"author":4,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"acf":[],"_links":{"self":[{"href":"https:\/\/investwithanedge.com\/wp-json\/wp\/v2\/pages\/1346"}],"collection":[{"href":"https:\/\/investwithanedge.com\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/investwithanedge.com\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/investwithanedge.com\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/investwithanedge.com\/wp-json\/wp\/v2\/comments?post=1346"}],"version-history":[{"count":0,"href":"https:\/\/investwithanedge.com\/wp-json\/wp\/v2\/pages\/1346\/revisions"}],"wp:attachment":[{"href":"https:\/\/investwithanedge.com\/wp-json\/wp\/v2\/media?parent=1346"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n