The Current Case For 15%+ Yielding 2X Leveraged mREIT ETNs

About: UBS ETRACS Monthly Pay 2x Leveraged Mortgage REIT ETN (MORL), MRRL, REML, Includes: ABR, AGNC, ARR, CLNC, DX, MORT, ORC, REM, STAR
by: Lance Brofman
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Lance Brofman
Debt, REITs, macro, ETF investing

Current economic conditions favor 2X Leveraged Mortgage REIT ETNs as a way to get current yields above 15%.

The biggest risk to mREITs is a spike up in short-term interest rates, which appears highly unlikely in the foreseeable future.

Recent announcements by UBS indicate that there may not be any arbitrage opportunities involving some ETNs trading significantly above their net indicative (asset) values.

The reasons for these moves by UBS are discussed and there does not seem to be any additional UBS credit risks to the ETNs involved.

Recent Developments in the 2x Leveraged mREIT ETNs

UBS ETRACS Monthly Pay 2X Leveraged Mortgage REIT ETN (MORL) and later, UBS ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN Series B (MRRL)