ETFs: Playing The Short Side Of Real Estate

With residential real estate having been on a downturn, some readers have asked how they could play the short side of the real estate market. The bad news is that there is no ETF currently on the market that mirrors residential real estate activity.

However, if commercial real estate is doomed to follow the same downward trend, there is a way to participate, but only if you are an aggressive investor. Seeking Alpha featured a write up on an UltraShort Real Estate ETF (SRS), which is a bet against a basket of commercial REITs.

SRS has only been around only since March 07 and, while it can provide you with superior profits, it can also be extremely volatile. Yesterday, for example, with the S&P; 500 being up +1.52%, SRS was down -5.69%. It’s definitely not for the faint of heart and, since it moves 200% of the change of the underlying index, you need to work with a sell stop plan to limit any losses, should this market go against you.

We currently have no holdings in SRS but, given changing circumstances, I may consider adding some small exposure.

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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