Wednesday’s ETF To Watch: Dow Jones U.S. Real Estate Index Fund (IYR)

by on February 22, 2012 | ETFs Mentioned:

Investors cheered as European leaders were able to come to a consensus on a Greek debt deal late yesterday to help the severely indebted nation. The terms will total to a 130 billion euro package marking the second relief funding that the country has received in the past two years. Some believe that this may help get Greece back on track, while others feel that the deal is simply prolonging the inevitable and only providing a temporary boost to markets until the same issue resurfaces down the road. No matter what happens, the Street will be happy to focus on something other than Greece for the next few days, as a number of significant data points are slated for the week [see also Why No Investor Should Own GLD].

Today will see data released in the U.S. regarding existing home sales. The housing market has been a major point of contention since it crashed in 2007 and 2008 due to sub-prime lending and a number of other issues. The recovery of the housing markets, or lack thereof, has also been a focal point of the overall economic recovery, as many feel that a rise in housing will be the tell-tale sign that we are back on the road to prosperity. The popular S&P Case-Schiller index has been stuck in a rut for the last two years and has been unable to establish any significant momentum [see also Greedy When Others Are Fearful ETFdb Portfolio Now Available].

U.S. existing home sales are predicted to come in around 4.66 million, a modest rise from last month’s 4.61 million. Danske Bank analysts commented on the matter, stating that “We have seen some improvement over the past few months, after the figure reached a historical low in the summer of 2007. However, we only expect to see a moderate gain of 1.0% in January, indicating that there is still a long way to go to get back to normal levels”. It should also be noted that this report has missed its estimated marks for the last two months.

In light of this data release, today’s ETF to watch will be the¬†Dow Jones U.S. Real Estate Index Fund (IYR). This ETF simply¬†measures the performance of the real estate industry of the U.S. equity market with over $3.6 billion in assets. The fund focuses on large and mid cap stocks like Simon Property Group, American Tower Corp, and Public Storage among others. IYR has been able to boast gains of 7.6% on the year and an impressive 146% jump in the trailing three year period. If today’s report comes in as expected or better, IYR should benefit during trading, but a negative report will put a fair amount of pressure on this ETF [see also REZ: Crushing The Real Estate ETF Competition].

Disclosure: No positions at time of writing.