UBS Offers Leveraged ETN to Track Global Mortgage REITs

UBS AG (UBS) is offering a leveraged exchange-traded note tied to an index of mortgage real estate investment trusts.

The ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN, which started trading yesterday under the ticker MORL, pays twice the returns of the Market Vectors Global Mortgage REITs Index. The gauge tracks the overall performance of publicly traded REITs around the world that derive at least half of their revenue from mortgage-related activity, according to a prospectus filed with the U.S. Securities and Exchange Commission.

The bank charges an investor fee of 0.4 percent a year, a redemption fee of 0.125 percent and a financing expense of 0.40 percent plus the three-month London interbank offered rate, or Libor, according to the prospectus. The ETN is UBS’s second real estate-linked note this year, after the ETRACS Monthly Pay 2xLeveraged Dow Jones International Real Estate ETN on March 21.

In September, UBS redeemed 12 ETNs tied to the Chicago Board Options Exchange Volatility Index, or the VIX.

Megan Stinson, a spokeswoman for UBS, declined to comment.

Libor is the rate at which banks say they can borrow in dollars from each other.

To contact the reporter on this story: Kevin Dugan in New York at kdugan4@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net