Floating Rate Bond ETF (TFLO) Hits New 52-Week High
For investors seeking momentum, Treasury Floating Rate Bond iShares ETF TFLO is probably on radar. The fund just hit a 52-week high, and is up 0.52% from its 52-week low of $50.28 per 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 of where it might be headed:
TFLO In Focus
The underlying Bloomberg U.S. Treasury Floating Rate Index is a market capitalization-weighted index that measures the performance of floating rate public obligations of the U.S. Treasury. The fund charges 15 bps in fees and yields 1.67% annually.
Why The Move?
The floating rate bond has been an area to watch lately due to rising interest rates. Floating rate bonds are investment grade and do not pay a fixed rate to investors but have variable coupon rates that are often tied to an underlying index (such as LIBOR) plus a variable spread depending on the credit risk of issuers. Since the coupons of these bonds are adjusted periodically, these are less sensitive to an increase in rates compared to the traditional bonds. Unlike fixed-coupon bonds, these do not lose value when the rates go up, making the bonds ideal for protecting investors against capital erosion in a rising rate environment.
More Gains Ahead?
The fund has a positive weighted alpha of 0.50. So, there is a decent outlook ahead for those who want to ride this surging ETF a shade further.
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iShares Treasury Floating Rate Bond ETF (TFLO): ETF Research Reports
