For investors seeking momentum, iShares 3-7 Year Treasury Bond ETF ( IEI ) is probably on radar now. The fund just hit a 52-week high, and is up 2.8% from its 52-week low price of $121.90/share.
But are more gains in store for this ETF? Let's take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:
IEI in Focus
IEI targets the intermediate end of the yield curve, holding 73 bonds in its basket. It has a weighted average maturity of 4.78 years and effective duration of 4.53 years. It is one of the most popular and liquid ETF in the Treasury space with AUM of over $5.8 billion and average daily volume of nearly 533,00 shares. The product charges 15 bps in expense ratio and pays 1.30% in 30-day SEC yield (see: all the Government Bond ETFs here ).
Why the Move?
The Treasury corner of the fixed income world has been an area to watch lately as investors are flocking to safe havens amid heightened uncertainty and volatility. This is especially true, as the global fundamentals are getting worse with a relentless slide in oil and persistent worries over the health of China. Also, weak corporate earnings, slumping commodities, geopolitical tension, sluggishness in other emerging markets like Brazil and Russia, and a spate of weak U.S. economic data have added to the woes.
More Gains Ahead?
Currently, IEI has a Zacks ETF Rank of 3 or 'Hold' rating with a Medium risk outlook, so it is hard to get a handle on its future returns one way or the other. However, it seems that the ETF might continue its outperformance at least in the near term given a positive weighted alpha of 2.26% and low 20-day volatility of 2.82% . As a result, there is definitely still some promise for risk-aggressive investors who want to ride on this surging ETF.