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Agency Bond ETF (AGZ) Hits New 52-Week High

Sweta Jaiswal, FRM

For investors looking for momentum, iShares Agency Bond ETF AGZ is probably a suitable pick. The fund just hit a 52-week high and is up roughly 5.2% from its 52-week low price of $109.81/share.

But does this ETF 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:

AGZ in Focus

The underlying Bloomberg Barclays U.S. Agency Bond Index is composed of short-term U.S. agency securities publicly issued by U.S. government sponsored agencies like Fannie Mae and Freddie Mac. The fund has a low-credit risk primarily because of its investment-grade focus. Owing to its low duration, the fund offers paltry yields and is inappropriate for yield-seeking investors. AGZ is charging 20 bps in fees.

Why the Move?

An intensifying US-China trade war with the imposition of 10% tariff on the remaining $300 billion of Chinese imports, effective Sep 1, has made investors jittery. Moreover, geopolitical tensions and a slowdown in the global economic growth are compelling investors to switch to safer options like fixed-income funds.

More Gains Ahead?

Given the uncertain market conditions, it is hard to get a handle on the fund’s future returns one way or another. However, it seems that AGZ might remain strong given a higher weighted alpha of 4.70.

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iShares Agency Bond ETF (AGZ): ETF Research Reports
 
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