Infrastructure ETF, ProShares Long and Short, and What's With the Vanguard REIT?

Includes: EOP, MIC, VNQ
by: Roger Nusbaum

Roger Nusbaum submits: A few things this morning, no big whoop.

1) With a hat tip to Richard Kang the first (in the U.S.) infrastructure ETF is on the way very soon. You can read Richard's write up and the Bloomberg write up too.

Macquarie is behind this one, you probably know about their other U.S. listed products, none of which are ETFs.

This up and coming ETF owns stocks, as opposed to Macquarie Infrastructure Company Trust (NYSE:MIC) (personal and client holding) which invests directly in different infrastructure-like assets. Macquarie has funds like MIC listed all over the world; this is something they know how to do very well.

My initial reaction is that I would rather not own this new ETF in favor of MIC. The ETF has a lot of U.S. exposure, so in order to buy it I would need to think it provided unusual access to the U.S. Macquarie has indices that would lend themselves to other ETFs from places like Asia, Australia and Europe which could be more interesting; stay tuned.

2) With a hat tip to Tom Lydon, the ProShares sector funds, the ones that go short, will be coming soon as well. ProShares quietly listed ETFs that go double long, short and double short the Russell 2000 and S&P 600. These funds will open the door to all sorts of very inexpensive market neutral strategies. One big plus is that short exposure can be created with out having to pay interest or the dividend. If the existing inverse ETFs haven't done so already, these funds stand to do some funny things with short interest readings. Going forward the people that follow these things may need to factor the assets in these funds into their analysis.

3) Marc Faber gave his picks in the Barron's roundtable this weekend. As usual, most of his ideas are not easily accessible to U.S.-based, retail investors. He said the 30 year treasury is a great short; he likes Malaysia and some soft commodities among other things.

4) One reader left a question asking about the run up in Vanguard REIT ETF (NYSEARCA:VNQ). He noted that it is up 7% YTD. He also said the P/E was 45 and wondered if that is high. I can't vouch for the P/E, but if correct it seems high to me, and I also do not know whether it is up 7% or not but will take his word.

Equity Office (EOP) is one of largest names in the fund. EOP is in the middle of being sold and has moved a lot lately. Two other holdings, that I checked, are also up what appears to be 10% YTD. While this may be an unlikely answer, I wonder if the money that has rotated out of bonds, as ten years have gone up in yield, has gone into REITs? That is not how it usually works, but combine that with the deal action and it could be an answer.