For investors looking for momentum, iShares U.S. Treasury Bond ETF GOVT is probably a suitable pick. The fund just hit a 52-week high, up roughly 11% from its 52-week low of $24.05/share.
But does it have more gains in store? Let’s take a look at the fund and its near-term outlook to gain insight into where it might be headed:
GOVT in Focus
GOVT tracks the ICE (NYSE:ICE) U.S. Treasury Core Bond Index before fees and expenses. The index measures the performance of U.S. dollar denominated, fixed rate securities with minimum term to maturity greater than a year and less than or equal to 30 years. GOVT is charging 15 bps in fees. The fund has amassed $13.96 billion in AUM.
Why the Move?
Escalating Sino-US trade war tensions are making investors jittery. Recently, China retaliated by imposing new tariffs of between 5% and 10% on $75 billion worth of goods from the United States, effective on some items from Sep 1 and others from Dec 15. Moreover, effective Dec 15, China has decided to reinstate a 25% tariff on U.S. automobiles and auto parts. To this, Trump responded by raising tariffs to 30% from 25% on $250 billion of Chinese imports effective Oct 1. Moreover, tariffs planned for Sep 1 on some Chinese imports will be revised to 15% from 10%. Also, the uncertainty in market conditions due to geo-political tensions and slowdown in the global economic growth are increasingly adding to the appeal of safe-haven picks like treasury bond ETFs.
More Gains Ahead?
Currently, GOVT has a Zacks Rank #3 (Hold) making it hard to get a handle on the fund’s future returns. However, it seems that GOVT might remain strong given a positive weighted alpha of 10.
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iShares U.S. Treasury Bond ETF (GOVT): ETF Research Reports
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Zacks Investment Research