Of all the so called “alternative” asset classes, real estate has to be the most basic of them. I often define “traditional” asset classes as simply stocks, bonds and cash with alternative covering basically everything else.I have written in the past about real estate, mostly with a negative bent. However, in the interest of finding new instruments (preferably of the indexing type) I refer to this article in the Wall Street Journal (sub. required) that mentions State Street Global Advisors and their SEC filing of an ETF “based on real-estate securities in 23 countries”. With all the attention to real estate in the past few years, it’s interesting that all ETF related products have been so focused on the US market (REITs, homebuilders).

According to the WSJ, this new ETF in the works should solve this problem with one position: “The State Street fund will be based on the Dow Jones Wilshire ex-US Real Estate Securities Index. The “ex-US” means there are no U.S. stocks.” Furthermore, there is some concern regarding just how diversified this one position will be: “Investors should note that, despite the large number of countries in the index, nearly 60% of the holdings are concentrated in just three: Australia with 20%, the United Kingdom with 19%, and Japan with 18%. The top nine countries comprise just more than 90% of the weightings.”

The article mentions a mutual fund, the Northern Global Real Estate Index Fund [NGREX], although as a global fund it includes US securities and thus has a slightly different mandate:

This makes me think about what I wrote about new products being released near market tops. However, with a 9% return since inception, I look to be wrong in this case. On the other hand, seeing this chart simply gives me more reason to put this upcoming ETF on a watch list. Not an immediate buy.Kudos to SSGA for getting back into the ETF game with some decent new offerings, but not with just another US equity mid cap growth ETF (or whatever). I spoke recently about new indices related to environmental services and steel from SSGA (perhaps this could lead to ETFs?), and now international real estate. So how about timber and infrastructure? These have been mainstream asset classes in the institutional space for quite some time now.