Anyone who believes that market efficiency is flawless should scrutinize these two ETNs. Even though MORL and NAV are nearly identical, MORL trades at a premium of 7.62 percent.

In addition to having a premium, it is at its highest level ever. At the time of our last check, MRRL was trading at a nice 0.14% discount to its underlying NAV. We've never seen a case in which the decision between two equivalent exchange-traded items was so heavily skewed. The MORL should be avoided in favour of the MRRL.

MORL (Etracs Monthly Pay 2x Leveraged Mortgage REIT ETN) and MRRL (Etracs Monthly Pay 2x Leveraged Mortgage REIT ETN Series B) were both exchange-traded notes (ETNs) issued by UBS, designed to provide 2x leveraged exposure to an index of mortgage REITs. The key difference lies in their issuance dates and structure. MORL was the original ETN, launched in 2012, while MRRL was introduced later in 2017 as a replacement, offering similar exposure but with slightly different terms, mainly for regulatory reasons. Both aimed to deliver high yields but carried significant risk due to leverage. UBS eventually delisted both products, emphasizing their complex nature and the risks involved in leveraged ETNs.