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MORL Fund Description
The ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN provides 2x levered exposure to a cap-weighted index of US and non-US REITS that derive at least 50% of their revenues from mortgage-related activity.
MORL FactSet Analytics Insight
MORL—an ETN—aims to provide 200% of the monthly returns of a market-cap-weighted index of global mortgage REITS. The underlying index offers fairly pure exposure to the mortgage REIT segment, with commercial REITs carrying the vast majority of the weight. It's worth noting that this is a concentrated market, and MORL is betting against the segment heavyweight Annaly Capital Management. The note—which is merely a promise to pay the index's leveraged return's opposed to holding the actual mortgage REITs in the index—provides its promised exposure over the duration of 1 month. The monthly reset means investors holding it for longer than a month may fall victim to the effects of compounding. As an ETN, MORL has the counterparty risk of UBS, and the embedded leverage in mortgage REITs is exacerbated by the fund's 200% exposure. The fund's liquidity is decent, with plenty of daily volume, albeit with fairly wide spreads. MORL charges a reasonable fee for a leveraged ETN, but of course most investors will be more concerned about trading costs. Note: MRRL, a B series version of the ETN, launched in Oct. 2015. It tracks the same index but its liquidity may differ.
MORL FactSet Analytics Block Liquidity
This measurement shows how easy it is to trade a $1 million USD block of MORL. MORL is rated a 5 out of 5.