Real Estate in general, and International Real Estate in particular, has traditionally been a difficult asset for most U.S. investors to purchase. Although most people own a home, exposure to commercial real estate has only been available to the wealthy or by investing in Real Estate Investment Trusts (REITs). Although REITs still represent an excellent way to get real estate exposure, ETFs are opening up even more options.

This particular ETF offers exposure to 18 different International Real Estate Markets, with the majority, 60%, being divided between the United Kingdom, Australia, and Japan. The remaining 40% however provides real estate exposure to some more esoteric markets, such as Singapore, New Zealand, and South Africa. To be eligible to be included in the index, a company must have a market capitalization of at least $200 million and derive 75% of its' revenue from the operation of real estate assets.

We believe the launch of this ETF is significant and something investors should take note of. Not because of the economics of this particular deal, of which we have no opinion, but rather because of an important developing trend that it represents. That trend is the further "Securitization of Real Estate Markets."

Traditionally, Real Estate has been a non-liquid market without good information. Local investors may have good knowledge about local market conditions and opportunities, but getting information about other real estate markets, domestic or international, has been exceedingly difficult. And even if one had good information, actually buying into those markets and negotiating the maze of legal requirements represented another hurdle. However, the growth of REITs and now real estate ETFs are removing those barriers. The average investor now has the ability to cost effectively "hire" top real estate management expertise in select real estate markets and can easily buy and sell their investment on major Stock Exchanges at current market value.

We expect the Securitization trend to continue in a big way and expect the Real Estate Markets, domestic and international, to be "diced and sliced" into more specialty pieces. For example, one of these days we expect you will be able to buy into specific markets, in specific cities, in specific countries. Although initially it will be limited to commercial real estate properties, we also expect the trend to filter down to the residential markets, where you will be able to invest in "packages" of rental properties, even within certain sections of a city. A "brave new world" of real estate investing is rapidly approaching.

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